Renowned economist Mohamed El-Erian on Thursday reiterated his call for Federal Reserve Chair Jerome Powell to resign, arguing it is a necessary step to protect the central bank’s independence from political pressure ahead of the pivotal Jackson Hole Symposium.
Powell Is Attracting More Attacks To The Federal Reserve
Speaking on Fox Business, the Allianz Chief Economic Advisor stated that Powell has become a political target, and his continued presence only invites further criticism that damages the institution.
“I said Chair Powell should resign because the longer he stays there, the more he attracts attacks on the institution,” El-Erian explained.
This stance doubles down on a position he first articulated on social media platform X on July 22, when he wrote, “If Chair Powell’s objective is to safeguard the Fed’s operational autonomy (which I deem vital), then he should resign.” –
Being Overly Data Dependent Is ‘Backward-Looking’
Beyond the institutional risks, El-Erian argued that the Fed is making a policy error by being overly “captive to data dependency,” which he described as backward-looking.
Despite a recent Producer Price Index (PPI) report coming in hotter than expected, he believes a September rate cut is warranted, pointing to a deteriorating jobs market as the primary concern.
“Every indicator suggested the labor market is weaker, and the risk is it weakens in an accelerated fashion,” he warned, suggesting a decisive 50 basis point cut could be necessary if another weak employment report emerges.
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All Eyes On Powell’s Speech At Jackson Hole Economic Symposium
With Powell set to deliver a highly anticipated speech at the Jackson Hole Economic Symposium on Friday, El-Erian outlined what he believes the Fed chair must communicate to the markets.
He urged Powell to “signal that the employment side is becoming what they are more worried about.”
El-Erian noted that with Powell's term ending next May, he will soon become a “lame-duck” chair. “What exactly is he fighting for?” El-Erian questioned, reinforcing his view that stepping down would be the best course of action to protect the Fed’s long-term integrity.
The three-day Economic Policy Symposium begins on Thursday, Aug. 21, and will go on till Aug. 23. The theme for the 2025 symposium is "Labor Markets in Transition: Demographics, Productivity, and Macroeconomic Policy."
Price Action
The SPDR S&P 500 ETF Trust (NYSE:SPY) and Invesco QQQ Trust ETF (NASDAQ:QQQ), which track the S&P 500 index and Nasdaq 100 index, respectively, fell on Wednesday. The SPY was down 0.27% at $638.11, while the QQQ declined 0.59% to $565.90, according to Benzinga Pro data.
On Thursday, the futures of the Dow Jones, S&P 500, and Nasdaq 100 indices were trading mixed.
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