Federal Reserve Chairman Jerome Powell (right) speaks at the New York Times Dealbook Summit at Jazz at Lincoln Center in New York, USA, on Wednesday, December 4, 2024.
Yuki Iwamura | Bloomberg | Getty Images
NEW YORK – Federal Reserve Chairman Jerome Powell said Wednesday he is not worried that President-elect Donald Trump will try to politicize the central bank after he takes office in January.
The issue of Fed independence raises concerns that President Trump may be trying to pull strings on monetary policy both through legislation and possibly by installing a “shadow chair” that could undermine Chairman Powell’s authority. has surfaced over the past few months in media reports.
But Powell said the act of Congress that created the Fed had safeguards to protect it from political influence.
“What does independence mean? It means we can make decisions without being overridden,” he told CNBC’s Andrew Ross Sorkin in an on-stage interview at the New York Times’ Dealbook Summit. That’s true.”
“This will ensure that these decisions are always made in the interest of the American people as a whole, not for any particular party or political outcome,” he added. “We must achieve maximum employment and price stability for the benefit of all Americans and remove it from politics completely.”
Powell gave no clues as to where he was leaning on the direction of short-term interest rates, but said the Fed could afford to be cautious. As previously stated, Powell said the Fed can be patient when considering future interest rate trends because the U.S. economy is “the envy of other large economies around the world.” .
The Fed’s next interest rate decision will be made within two weeks. The market has about a 75% chance that the Federal Open Market Committee will cut the key borrowing rate by a quarter of a percentage point. The Fed is then expected to skip its January meeting and make several more rate cuts in 2025.
During his first term in office, Trump was sharply critical of the Federal Reserve and his nominee, Powell. In the months leading up to this year’s election, President Trump advocated for central banks to give him a say in determining interest rates.
Many presidents have sought to influence the Fed, but President Trump has been most vocal about doing so. Still, Powell said he believes there is strong support in Congress to move the Fed’s decision-making away from the political maelstrom in Washington.
“I think there’s very broad support for that set of ideas in both parties on both sides of the Hill in Congress, and that’s what’s really important,” he said. “This is the law of the land and I am not concerned that we risk losing our legal independence.”
President Trump’s transition team did not respond to requests for comment.
