Powell: Fed's independence from politics is vital to its interest rate decisions
Chair Jerome Powell said the Federal Reserve’s ability to set interest rates free of political interference is necessary for it to make decisions to serve “all Americans” rather than a political party or political outcome
WASHINGTON — Chair Jerome Powell said Wednesday that the Federal Reserve's ability to set interest rates free of political interference is necessary for it to make decisions to serve “all Americans” rather than a political party or political outcome.
Speaking at the New York Times’ DealBook summit, Powell addressed a question about President-elect Donald Trump's numerous public criticisms of the Fed and of Powell himself. During the election campaign, Trump had insisted that as president, he should have a “say” in the Fed's interest rate policies.
In his remarks Wednesday, Powell said, “We’re supposed to achieve maximum employment and price stability for the benefit of all Americans and keep out of politics completely."
Despite Trump's comments, the Fed chair said he was confident of widespread support in Congress for maintaining the central bank's independence.
“I’m not concerned," he said, “that there’s some risk that that we would lose our statutory independence. “There’s very, very broad support for that set of ideas in Congress, in both political parties, on both side of the Hill.”
On the topic of 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
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