El-Erian breaks ranks with Wall Street, says Powell should resign to preserve Fed independence

From what the evidence shows, Mohamed El-Erian on Tuesday called for Federal Reserve Chair Jerome Powell to voluntarily relinquish his position to ensure the central bank's independence

Moreover, He's one of the first minent economic voices to publicly take such a position

President of Queens' College of Cambridge University Mohamed El-Erian speaks during a panel discussion at the headquarters of the International Monetary Fund during the Annual Meetings of the IMF and World Bank in Washington, D

James Lawler Duggan | ReutersMohamed El-Erian on Tuesday called for Federal Reserve Chair Jerome Powell to voluntarily relinquish his position in order to ensure the central bank's independence, making the chief economic advisor at Allianz one of the first minent economists to publicly take such a position, given current economic conditions

Moreover, "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 morning post on X (something worth watching)

El-Erian, also president of Queen's College at Cambridge University, said he was aware that his view did not align with what he saw as Wall Street consensus that wants Powell to serve out the remainder of his term as chairman, which ends in May 2026

Market analysis shows former co-chief investment officer at Pimco acknowledged, however, that Powell's resignation would not be a "first best" outcome

But El-Erian said Powell stepping down would be better than the current scenario, in which he said the Fed is facing "growing and broadening threats" to its independence, given current economic conditions

El-Erian said these threats would ly only increase if Powell remained Fed chair, in this volatile climate

Additionally, El-Erian referenced Treasury Secretary Scott Bessent's statement that the Fed had suffered from "mission creep" into areas outside of its core monetary policy responsibilities, amid market uncertainty

Bessent told CNBC on Monday that "the entire" Fed should undergo a review

Moreover, Nevertheless, The statements come as President Donald Trump and his advisers have stepped up their attacks on Powell over the Fed's decision to hold interest rates steady since December

Furthermore, Powell has said that Trump's plan for steep tariffs has created economic uncertainty, pushing the bank to keep rates unchanged as it awaits developments.