U.S. Federal Reserve Chairman Jerome Powell, right, speaks during the New York Times DealBook Summit at Jazz at Lincoln Center in New York, U.S., on Wednesday, December 4, 2024.
Yuki Iwamura | Bloomberg | Getty Images
NEW YORK — Federal Reserve Chairman Jerome Powell said Wednesday he is not concerned that President-elect Donald Trump will try to politicize the central bank once he takes office in January.
The issue of the Fed’s independence has come up in recent months, amid reports that Trump may try to take control of monetary policy, both through legislation and possibly by installing a “shadow chair” ‘ which could undermine Powell’s authority.
However, Powell said there are safeguards in the congressional legislation that created the Fed that will help protect it from political influence.
“What does independent mean? It means we can make our decisions without them being reversed,” he told CNBC’s Andrew Ross Sorkin during an onstage interview at the New York Times DealBook Summit.
“That gives us the ability to make these decisions at all times for the benefit of all Americans, and not for any particular political party or political outcome,” he added. “We must achieve maximum employment and price stability for the benefit of all Americans and keep this completely out of politics.”
Powell gave no indication of which direction he is leaning on the short-term path for interest rates, although he did note that the Fed can afford to be cautious. As he has said before, Powell said the U.S. economy is “the envy of other major economies around the world,” which allows the Fed to be patient as it considers future interest rate moves.
The Fed’s next interest rate decision comes in two weeks. Markets estimate about a 75% probability that the Federal Open Market Committee will cut its key interest rate by a quarter of a percentage point. The Fed is then expected to skip the January meeting before making several more cuts in 2025.
During his first term, Trump sharply criticized the Fed and Powell, whom he nominated. In the months leading up to this year’s election, Trump advocated giving the president a say when the central bank makes decisions on interest rates.
While many presidents have tried to influence the Fed, Trump has been the most public about it. Still, Powell said he believes there is strong support in Congress for keeping the Fed’s decision-making separate from the political swirl in Washington.
“I think there is very, very broad support for this set of ideas in Congress across both political parties on both sides of the hill, and that’s what really matters,” he said. “It is the law of the land, and I am not concerned that there is any risk of us losing our legal independence.”
Trump’s transition team did not immediately respond to a request for comment.