One of the most significant events for the global economy is nineteen months away. That’s when May 15, 2026, rolls around and Jerome Powell’s term as Federal Reserve chair expires.

Former US President Donald Trump has made it clear that Powell would not serve another term under his administration. Debates also continue about whether President Trump could invoke the Federal Reserve Act to remove Powell as chair before the end of his term. If US Vice President Kamala Harris wins the presidential election, it is unclear if Powell would wish to serve a third term and become the longest serving Chair since Alan Greenspan.

As the Fed prepares to cut interest rates next week and declare victory on inflation, it’s not too early to begin to consider Powell’s legacy. Appointed in 2018 by Donald Trump, he has navigated a global pandemic, a major surge in inflation, labor market upheavals, banking failures, supply chain shocks, and the geopolitical tremors of Russia’s invasion of Ukraine. He’s also heard calls, for the first time in decades, that challenges central bank independence. Throughout these challenges, Powell faced constant tradeoffs between the Fed’s dual mandate to promote maximum employment and maintain stable prices.

Extraordinary circumstances required bold responses. In the spring of 2022, Powell expanded the Fed’s balance sheet to a record $8.9 trillion through large-scale quantitative easing purchases, including bonds and mortgages. The chart below illustrates the peak balance sheet expansion under the four most recent Fed chairs, highlighting the unparalleled magnitude of the Fed’s intervention during Powell’s tenure.

While the scale of interventions was unmatched, the tools deployed were familiar. Powell’s policy approach during times of crisis drew from a playbook developed by former Fed Chair Ben Bernanke during the 2008 financial crisis. Large-scale asset purchases and quantitative easing are not novel monetary policy innovations, but Powell used them at a historic scale.

He was not acting alone. Monetary policy was complemented by ambitious fiscal policy under the Biden administration. The American Rescue Plan, the Inflation Reduction Act, the CHIPS and Science Act, and other spending bills provided fiscal stimulus that matched the Fed’s monetary expansion. While Powell provided liquidity, Congress and the administration provided the spending roadmap.

Over the same period, the United States experienced some of the highest inflation in decades. The consumer price index in the United States reached a record 9.1 percent in June 2022, a level not seen since 1981. But the United States wasn’t alone in massive inflation spikes. How does Powell’s leadership compare to his peers?

The chart below shows that large central banks around the world similarly expanded their balance sheets over the past several years.

Looking at the data, the US economy weathered the storm better than most of its advanced economy peers. Even with similar inflation levels, US gross domestic product growth is triple that of each of these economies. Powell is not the only actor in that story, but he did play a decisive role.

What comes next?

Powell likely will be the first of his peers to step down after overseeing a massive balance sheet expansion. European Central Bank President Christine Lagarde’s term will end in November 2027, while Bank of England Governor Andrew Bailey’s and Bank of Japan Governor Ueda Kazuo’s terms will end in the spring of 2028. They will remain to see through the difficult task of unwinding these interventions while ensuring inflation doesn’t return.

In the 1940s, the legendary Fed Chair Marriner Eccles (the Fed’s building bears his name) was questioned about wartime spending and monetary policy. He was asked whether the United States could ever return to a system where the Fed couldn’t just “create credit.”

Eccles replied, “Not in your lifetime or mine.”

One can imagine Powell saying something similar today. Perhaps that’s because the two men, separated by seven decades, understood that their job was to do whatever it took to stabilize an economy in crisis. Even if there was a cost.

Josh Lipsky is the senior director of the Atlantic Council GeoEconomics Center and a former adviser to the International Monetary Fund.

Benjamin Lenain is an assistant director with the Atlantic Council GeoEconomics Center.

This post is adapted from the GeoEconomics Center’s weekly Guide to the Global Economy newsletter. If you are interested in getting the newsletter, email SBusch@atlanticcouncil.org

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