WASHINGTON — Federal Reserve Chair Jerome Powell emphasized the importance of maintaining the central bank’s independence from political influences during remarks made at the New York Times’ DealBook summit. He noted that such independence is essential for the Fed to serve the best interests of all Americans rather than aligning with a specific political party or agenda.
In response to inquiries regarding President-elect Donald Trump’s vocal criticisms of both the Federal Reserve and Powell himself, the Fed Chair reiterated the organization’s goal to promote maximum employment and stable prices without political pressure. “We’re supposed to achieve maximum employment and price stability for the benefit of all Americans and keep out of politics completely,” Powell asserted.
Powell expressed his belief that there is significant bipartisan support in Congress for preserving the Fed’s autonomy, stating, “I’m not concerned that there’s some risk that we would lose our statutory independence.”
Concerning interest rates, Powell conveyed that the Fed is positioned to thoughtfully reduce its benchmark rate due to the robustness of the economy and the notable decline in inflation rates since their peak two years prior. The central bank is striving to navigate a “soft landing” for the economy—aiming to bring inflation down to its 2% target through interest rate adjustments while avoiding a recession. Achieving this balance historically has proven to be challenging.
Currently, economic indicators suggest a favorable trajectory toward this goal, with a gradual slowdown in the job market and a significant decrease in inflation. However, inflation still hovers just above the Fed’s target, potentially leading policymakers to hesitate before implementing further rate cuts.
Throughout the week, several other Federal Reserve officials have indicated expectations of additional rate reductions, although they have not made firm commitments regarding the immediate upcoming meeting later this month. Notably, Christopher Waller, a key member of the Fed’s Board of Governors, mentioned his leaning toward a rate cut in two weeks, though he acknowledged that negative inflation or employment data could prompt him to favor keeping rates steady.
Mary Daly, president of the Federal Reserve Bank of San Francisco, also expressed support for lowering rates but refrained from specifying a timeline. In an interview, she mentioned, “Whether it’ll be in December or some time later, that’s a question we’ll have a chance to debate and discuss at our next meeting. But the point is, we have to keep policy moving down to accommodate the economy because we want a durable expansion with low inflation.”
