Federal Reserve Chairman Powell (right) speaks at the New York Times DealBook Summit held at Jazz at Lincoln Center in New York, the United States, 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 Federal Reserve after taking office in January.
Questions about the Fed’s independence have arisen over the past few months, with reports that Trump may try to influence monetary policy through legislation and possibly by creating a “shadow chairman” who could undermine Powell’s authority.
However, Powell said there were safeguards in the congressional legislation that created the Fed that would help shield it from political influence.
“What does independence mean? It means we can make decisions without being overturned,” he told CNBC’s Andrew Ross Sorkin in an onstage interview at the DealBook Summit.
“This gives us the ability to make these decisions for the benefit of all Americans at all times, not for any particular party or political outcome,” he added. “We should achieve the greatest possible outcome for the benefit of all Americans. Employment and price stability and keeping it out of politics entirely.”
Trump has been sharply critical of the Fed and his nominee, Powell, in his first year in office. In the months leading up to this year’s election, Trump advocated for allowing the president a say in central bank interest rate decisions.
While many presidents have tried to influence the Fed, Trump has been the most public about it. However, Powell said he believed there was strong support in Congress to keep the Fed’s decisions from being affected by the political maelstrom in Washington.
“I think there’s very, very broad support for this set of ideas on both sides of the aisle in Congress, and that’s what’s really important,” he said. “It’s the law of the land and I’m not concerned that we’re going to lose our statutory independence.”
Powell did not reveal his preference for the near-term direction of interest rates, but he did note that the Fed could remain cautious. As Powell said before, the U.S. economy “is the envy of other large economies around the world.”
The Fed’s next interest rate decision will be announced in two weeks. Markets estimate there is about a 75% chance that the Federal Open Market Committee will cut its key borrowing rate by a quarter of a percentage point.
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