Jerome Powell, the former chair of the Federal Reserve who now serves as a governor, has a message for anyone thinking about meddling with the central bank: Don't. It's a bad idea, and future administrations will regret it.

Speaking at an event in Boston where he received a political courage award, Powell didn't name names or air specific grievances. But his warning was clear. "If any administration finds a way to remove Fed officials over policy differences, then future administrations will do so as well," he said, as reported by the Wall Street Journal on Sunday.

Powell called the Fed's credibility a "priceless asset" built over decades, one that he and his colleagues have a duty to protect. He also pointed out that the law already protects Fed officials from being fired for policy disagreements, and that the executive branch has "no role in the selection or oversight of the 12 reserve bank presidents" who vote on interest rates.

This is Powell's first public remarks since stepping down as chair a week ago. Normally, departing Fed chairs retire from public service. But Powell chose to stay on as a governor, and his comments hint at why: he sees a real threat to the Fed's independence and wants to be there to defend it.

The Trump-Powell Dynamic

The backdrop here is the long-running tension between President Donald Trump and Powell. Trump has repeatedly criticized and pressured Powell over interest rate decisions, and he's made no secret of his support for new Fed Chair Kevin Warsh. Economist Mohamed A. El-Erian has suggested that the conflict between Trump and Powell was more personal than structural, but the implications are anything but personal.

Trump has indicated that Warsh will have the freedom to set rates independently—a stark contrast to how he treated Powell. But the real test of independence is coming soon: the Supreme Court is set to rule on Trump's bid to remove Fed Governor Lisa Cook over alleged mortgage fraud, which she denies. It's the first attempt to oust a sitting Fed governor in the central bank's history.

Warsh's New Inflation Gauge

Meanwhile, Powell's successor is already making waves. Kevin Warsh has signaled he wants to change the Fed's primary inflation measure, ditching core personal consumption expenditures (PCE) in favor of trimmed-mean and median PCE, the ones produced by the Dallas and Cleveland Feds. It's a technical shift, but one that could have big implications for how the Fed sets policy.

Billionaire investor Ray Dalio, however, has a warning for Warsh: don't cut rates too soon. Dalio cautioned that if Warsh decides to lower rates amid ongoing stagflation—a toxic mix of high inflation and slow growth—it could harm the Fed's credibility. "Ongoing inflationary pressures and slowing growth require careful consideration by policymakers," Dalio said.

Powell's warning, Warsh's new inflation gauge, and the Supreme Court case all point to one thing: the Fed's independence is under more pressure than it has been in decades. And as Powell put it, that's a priceless asset worth fighting for.