Jereome Powell isn’t taking the bait — and it’s a lesson for us all.
For months, Trump has lobbed a slew of ad hominem attacks, from “Mr. Too Late” to “knucklehead” and “numbskull,” at the Federal Reserve chairman, who has declined to cut interest rates as fast as Trump would like. Trump has also called on Powell to step down.
The pair’s latest face-to-face encounter came on Thursday, when they jointly toured the Federal Reserve headquarters, which is undergoing a yearslong, $2.5 billion renovation project.
At one point, Trump and Powell exchanged words about the cost of the renovation, a key talking point for Trump and what some political observers have said could serve as a possible pretext for Powell’s dismissal. Beyond shaking his head and disputing the overall renovation cost suggested by the President, Powell remained civil.
Teflon Don, meet Judicious Jay.
Powell’s demeanor, along with his focus on building consensus and remaining adaptable, demonstrates the importance of steady leadership, Fed watchers told Business Insider.
“He doesn’t get ruffled easily,” Alan Blinder, a professor of economics at Princeton who served as vice chairman of the Fed’s Board of Governors in the mid-1990s, said of Powell.
What Powell observers described as his calm and pragmatic approach to navigating political crossfire and economic challenges is worth emulating — regardless of your political views or stance on interest rates, they said.
Here are three lessons business leaders could glean from Powell’s approach:
Project calm, even when things are turbulent
Part of the Fed chair’s job is to convey an analysis of what’s going on and remain composed in difficult times, Donald Kohn, a senior fellow at the Brookings Institution who spent 40 years at the Fed, told BI. That’s something Kohn sees Powell doing now.
“Stoicism is an appropriate reaction to what he’s going through,” Kohn said, referring to Trump’s criticisms. Amid those, Powell, whose term as chairman ends in May, has said he won’t leave early.
When asked about Powell’s leadership and whether Trump would seek to remove Powell, a White House spokesperson referred BI to recent remarks Trump has made, including Thursday, when he told reporters, “To do that is a big move, and I just don’t think it’s necessary.”
Trump previously floated the possibility of firing Powell for “fraud,” an apparent reference to his critiques of the Fed’s renovation.
Related stories
Business Insider tells the innovative stories you want to know
Business Insider tells the innovative stories you want to know
Amid the recurring volleys from the White House, Kohn said part of Powell’s approach appears to be keeping the Fed focused on the goals Congress has set and “trying to tune out the noise,” most notably from the President.
Earlier in Powell’s tenure, he demonstrated that same sense of calm and purpose when the pandemic threatened the stability of financial markets, Kohn said.
It’s not always easy, but leaders from Apple’s Steve Jobs to OpenAI’s Sam Altman have discussed the importance of maintaining focus, especially in stressful periods.
Build consensus
As a leader, Powell often seeks out areas of agreement with lawmakers and among fellow central bank officials, said Claudia Sahm, a former Fed economist who is now chief economist at the investment firm New Century Advisors.
While the Fed tends to be a body that works by consensus, she said, it can nevertheless require great effort to set the agenda and get the 19 participants in the agency’s Federal Open Market Committee, which sets monetary policy, and its dozen voting members to agree.
“That’s something he has excelled at,” Sahm told BI.
Kohn likewise said that Powell works hard at finding common ground.
“He prides himself, justifiably, in his powers of both persuasion and explanation,” he said.
Those can be useful traits for leaders who want to motivate their teams. Besides, research indicates that the tough-boss approach isn’t necessarily the most successful leadership strategy.
Part of Powell’s playbook has been persuading people to come around to his view, Blinder said.
“He has had some dissent during his time as Fed chair, but not a lot,” he said.
Demonstrate flexibility and avoid hubris
Sahm said that while Powell has been “pretty clear” that the Fed has made some errors, his pragmatism helped him move forward.
The economy didn’t slip into a recession, Sahm said, despite a rapid series of rate hikes starting in 2022 that some observers had warned could stall economic growth.
Powell, a Washington, DC-native and an experienced operator on Wall Street, hasn’t necessarily spent as much time wading through economic minutiae the way some of his predecessors have, Sahm said. That appears to have been an asset when the pandemic shut down huge portions of the economy overnight.
“He’s not dogmatic,” she said. That means he’s armed with “an openness” and a pragmatism that, she said, can lead to questions like “What do we see here? What should we do next?”
Remaining open to new ideas — and not trying to appear like a know-it-all — can help leaders build credibility.
After Powell determined the Fed had been too slow to hike interest rates as a way to tame inflation, Kohn said, Powell “moved very, very rapidly and amazingly aggressively to correct that mistake.”
Leaders who own their missteps — and who encourage their teams to admit theirs — can create healthy cultures within organizations.
Kohn said that a characteristic of a good leader is to say, “Wait a second. We kind of got this wrong.” In the Fed’s case, he said, by acknowledging the situation turned out to be different than what policymakers had expected, it was prudent to move “boldly and aggressively” to adapt to the emerging situation.
The willingness to pivot is a strength, Kohn said.
“Leaders get into problems when they don’t admit they were wrong,” he said.
In response to questions about Powell’s leadership philosophy and his handling of Trump’s criticism, a Fed spokesperson directed BI to a May commencement speech Powell delivered at Princeton.
According to a transcript of his remarks on the Fed website, Powell encouraged graduates to consider how, decades on, they would want to believe they had tried to do what was right.
“At the end of the day, your integrity is all you have,” Powell said. “Guard it carefully.”
