President-elect Donald Trump has been loud-and-clear about his complaints about the way the Federal Reserve does business, including insisting the president should “have a say” in Fed policies.
But on Wednesday, Fed Chair Jerome Powell said the Fed’s ability to set interest rates without political interference is necessary for decisions that serve “all Americans, the Associated Press reported.
Powell, speaking at the New York Times’ DealBook summit, said, “We’re supposed to achieve maximum employment and price stability for the benefit of all Americans and keep out of politics completely,” according to the AP report.
Talking specifically about interest rates, Powell said the Fed can afford to cut its benchmark rate cautiously, because the economy is doing better than the Fed thought it was in September, when it collectively predicted four rate cuts in 2025 after three cuts in 2024.
“We’re not quite there on inflation, but we’re making progress,” Powell said. “We can afford to be a little more cautious.”
The Fed has been aiming to deliver a “soft landing” for the economy, whereby the central bank’s interest rate hikes manage to help reduce inflation to its 2% target without causing a recession. History has shown it’s a rare and difficult feat.
According to the AP report, several Fed officials have said they expect to keep reducing rates, without committing to a reduction at their next meeting later this month.
On Monday, board of directors member Christopher Waller said he was “leaning” toward a rate cut when the central bank meets in two weeks, depending on forthcoming data.
