Top economist breaks from Wall Street consensus amid political pressure on central bank

July 24 — Mohamed El-Erian, chief economic advisor at Allianz and president of Queen’s College at Cambridge University, has called on Federal Reserve Chair Jerome Powell to resign in order to preserve the institution’s independence. His comments make him one of the first prominent economists to publicly advocate for Powell’s early departure.

“If Chair Powell’s objective is to safeguard the Fed’s operational autonomy (which I deem vital), then he should resign,” El-Erian said in a post on X. While acknowledging that his stance diverges from Wall Street’s preference for Powell to complete his term through May 2026, El-Erian warned that the Fed faces “growing and broadening threats” that could further compromise its autonomy.

He cited recent remarks from Treasury Secretary Scott Bessent, who accused the Fed of “mission creep” beyond its core monetary policy role, and called for a full institutional review. These concerns come amid escalating attacks from President Donald Trump and his team, who have criticized the Fed for holding interest rates steady since December.

El-Erian noted that while Powell’s resignation wouldn’t be an ideal scenario, it could help defuse the mounting political pressure and restore credibility to the central bank at a critical juncture for U.S. monetary policy.