Powell Defies Tradition, Stays on Fed Board as Warsh Clears Senate Panel

Central-bank turf wars are hardly new: in 1951 the Fed-Treasury Accord ended post-war White House pressure on rates, and Nixon’s 1971 arm-twisting of Arthur Burns preceded the Great Inflation. Powell’s refusal to vacate mirrors Marriner Eccles’ post-1948 board stay, highlighting a long arc where independence waxes and wanes with political impatience over growth and inflation. Today’s standoff—fueled by a DOJ investigation and an activist White House—is unfolding against 25 years of balance-sheet expansion and populist backlash against elite technocrats. If Warsh succeeds in shrinking the Fed and cutting rates amid 3 %-plus inflation, it could mark a structural pivot away from the post-2008 “ample-reserves” regime; if the clash erodes credibility, it may presage the sort of policy subordination that fed the 1970s inflation spiral. Either way, on a century scale the episode is another reminder that central-bank autonomy is conditional, not absolute, and that legal and political tools—not just interest rates—shape the monetary order.