On Thursday, the Federal Reserve just covered that in their announcement. Even though former President Donald Trump continued to put pressure on the Fed, it reaffirmed its commitment to independence in monetary policy. Very clearly, in this release, the refrain was that the Federal Reserve has to make data-dependent decisions. It operates as the only truly non-partisan actor in America’s financial ecosystem, independent of the political process.
Chair Jerome Powell, appointed during Trump’s first term in 2018, stated that the Federal Reserve will “set monetary policy, as required by law, to support maximum employment and stable prices and will make those decisions based solely on careful, objective, and non-political analysis.” This announcement follows a long pattern of the former President calling on Powell to slash interest rates, essentially printing money to boost the economy at all costs.
Just last week, Trump tweeted that now would be a “PERFECT time” for the Fed to reduce interest rates. His remarks added to the pressure on the central bank. Powell has not wavered in his notes of caution about elevated tariffs. The former would risk unleashing inflation, which he does not want, he has said, indicating that officials are not rushing to implement rate reductions.
The Federal Reserve’s statement is particularly noteworthy given Trump’s previous threats to fire Powell over monetary policy disagreements. The Supreme Court has described the Federal Reserve as a “uniquely structured, quasi-private entity,” underscoring its distinct position within the U.S. government system.
In response to Trump’s criticisms, Karoline Leavitt acknowledged the correctness of the Federal Reserve’s statement but noted that Trump believes Powell is mistaken in his reluctance to lower rates.
With the COVID-19 crisis, last year, the Federal Reserve greatly decreased interest rates. Powell’s adamant that any decisions going forward will be very dependent on future economic data. He reiterated this point in the Federal Reserve’s official statement, saying, “Chair Powell did not discuss his expectations for monetary policy, except to stress that the path of policy will depend entirely on incoming economic information and what that means for the outlook.”
Powell’s leadership appears committed to maintaining the integrity of the Federal Reserve’s mission.