Looking back at Jerome Powell's 8-year term as Federal Reserve Chair

AYESHA RASCOE, HOST:

Federal Reserve Chair Jerome Powell's eight-year term comes to an end this week, a term that saw a global pandemic that spiked unemployment, the highest inflation rate in 40 years and President Trump's attempts to undermine the Fed's independence.

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JEROME POWELL: After my term as chair ends on May 15, I will continue to serve as a governor for a period of time to be determined.

RASCOE: That was Powell late last month, and that announcement that he'll remain on the Fed is also out of the ordinary. Patrick Harker was president of the Federal Reserve Bank of Philadelphia from 2015 to 2025. He's currently a professor at the University of Pennsylvania's Wharton School of Business, and he joins us now. Welcome to the program.

PATRICK HARKER: Thanks for having me.

RASCOE: You served alongside Jerome Powell as a member of the Open Market Committee. That's the group in charge of setting interest rates, among other things. How would you describe Powell's leadership style?

HARKER: Steady, and when need be, forceful. Jay is a consensus builder. The committee is a consensus. You can't - no one person can get their way on the committee. It really is 19 people in a room with strong opinions. He would let us know where he stood, but he would listen to us, and I really respect that. That's how things get done in the Fed. And I would argue that's how things get done in life, that we have to listen to each other. And at the end of the day, though, why I said forceful, when the pandemic hit, for example, he did not hesitate to take action to help keep the economy going for the American people.

RASCOE: Talk to me about that. Do you feel like there were missteps, even allowing that the decisions were only his to make?

HARKER: I think we have to go back very quickly in history. If you look at the great financial crisis in 2008, '09, '10, I think the consensus is that we underresponded there. This time around, it wasn't just the Fed responded forcefully by taking rates to zero, but the fiscal side of the house put in a lot of money, let's call it $6 trillion into the hands of Americans to stimulate the economy. Yes, the labor market bounced back quickly, but so did inflation, and that was the real issue that we had to deal with once we got out of the deep throes of the pandemic.

RASCOE: Trump has explicitly demanded lower interest rates, called Powell a moron, started a criminal investigation into the Fed's building renovations, attempted to fire Governor Lisa Cook. Here's another clip from Powell's press conference late last month.

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POWELL: I worry that these attacks are battering the institution and putting at risk the thing that really matters to the public, which is the ability to conduct monetary policy without taking into consideration political factors.

RASCOE: Fed chairs typically step down after their terms expire. What do you make of Powell's decision to stay at the Fed as a governor?

HARKER: I give him a lot of credit. This is not an easy thing for him to do, and he's staying on because he cares about the institution. He's staying on until all the cloud that's over the Fed gets lifted. Look, credibility is the real coin of the realm when it comes to the Fed. If institutions lose their credibility, they can't do their job. And so Jay wants to make sure that the Fed maintains its credibility through what is a very difficult period.

RASCOE: You know, with Trump bashing the Fed like this, applying so much pressure, how can that credibility remain?

HARKER: I think not only the chair, but the other 18 members have to continue to do their job. And what is that job? Look objectively at the data. Look at what it's telling you, and even though it may be difficult, do the right thing for the country. The Fed's job is to do things that are sometimes not comfortable, that people don't agree with. But that's why independence of the Fed is so vital for its mission.

RASCOE: What are you going to be paying attention to as the new chair, Kevin Warsh, takes over?

HARKER: So I don't think the committee is going to change a whole lot. I mean, Kevin will be changing, but that's one seat, and that's it. The committee is going to continue to need to deal with what's in front of them right now, which is inflation. Inflation was running above its 2% target even before the war broke out, but now the war and its aftermath are going to keep inflation up pretty high for a period. So the Fed's going to have to deal with that, and the best way can deal with that right now is what I think they just decided at the last meeting, to stay where they are and let some of this uncertainty resolve itself.

RASCOE: Do you have any concerns about Warsh's independence?

HARKER: No, I don't. I think he will be an institutionalist because he understands how vitally important that is to this country. He's a student of the Fed, and I think he will maintain the independence of the Federal Reserve.

RASCOE: You're a professor now. How would you grade Powell's tenure as Fed chairman?

HARKER: He faced things that were beyond the normal course of duty. So if you add on the extra credit, if I'm grading, getting us through the pandemic, I would give him an A+.

RASCOE: That's Patrick Harker, former president of the Federal Reserve Bank of Philadelphia. Thank you so much for joining us.

HARKER: Thank you.

(SOUNDBITE OF J. COLE SONG, "FORBIDDEN FRUIT (FEAT. KENDRICK LAMAR)") Transcript provided by NPR, Copyright NPR.

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