Powell determined the Fed Independence Act when he met Trump but the president does not seem to receive the message

  • Federal Reserve President Jerome Powell met with President Trump And he firmly repeated the Fed’s independence, emphasizing that monetary policy decisions are based solely on economic data, not on political pressure. Despite Trump’s ongoing calls for lower interest rates and past threats to dismiss Powell, the Fed maintains his position that his term is to support maximum employment and stable prices through non-political data-based analysis.

When Jerome Powell was summoned to the White House, he went with a clear message: Trump had no power over the Federal Open Market Committee.

In a rare statement issued yesterday, the Fed confirmed that President Powell was invited to a meeting with Trump.

There has never been doubt what the topic of the discussion between the couple will be when they eventually sit down.

Trump is constantly lobbing FOMC with the basic percentage, or keeping it steadily before the election (not to give the Biden camp some perceived advantage) or reduce the percentage as soon as it wins the oval office.

The connection between Powell and Trump in his second administration is Torny, the least, with the president threatening to fire Powell, as well as to give him a nickname “Too Late Powell”.

But in the match that happened yesterday, Powell tried to set the record straight.

“President Powell did not discuss his expectations for monetary policy, except to emphasize that the path of policy would depend entirely on incoming economic information and what it means for the prospects,” the Fed said.

Whether the message has landed or not for debate or not.

After the meeting, Trump also clarified his thoughts, with White House press secretary Carolyn Levitite yesterday told reporters that Powell “puts us in an economic disadvantage for China and other countries” without reducing the percentage.

“The president was very vowel for this, both publicly and now I can reveal privately,” she added.

While Levitus said the president had made it clear that he believed that Powell was making a “mistake”, he did not raise the issue of termination of the president’s term before his end in May 2026 – a move that Powell said he would not be legal.

Non -political agency

Powell, who was nominated to run FOMC from Trump in his first term, held a stable line in front of a criticism of the oval office.

When pressed again and again for Trump’s rhetoric that FOMC must reduce the percentage to stimulate the economy, Powell insists that the decision -making process of the Commission is firmly based on data and anecdotal evidence from any regional bank.

The will of Wall Street or the Oval Office is not reported as to whether to reduce, go or hold the base rate – which is currently 4.25% to 4.5%.

While President Trump has accused Powell of being “political”, the chairman’s rebuke is dumb.

“We are a non -political agency,” he told reporters last summer. “We do not want to participate in politics in any way.”

And this line was again repeated this week, with the Fed added in his statement: “President Powell said that he and his FOMC colleagues would determine the monetary policy, as required by law, to support maximum employment and stable prices and make these decisions based solely on careful, objective and neopolitical analysis.”

The argument for an independent central bank is clear and the threats to the autonomy of the decision -making process have caused vibrations in the markets in the past.

FOMC is federally authorized to be independent of politics, so that the main economic lever in its arson – the main percentage – not to be used to achieve the goals of anyone sitting in the White House. Instead, it is located to guarantee the long -term health of the economy.

Examples in the past, in which the president has intervened too much, have not worked out well – for example, President Nixon – watching markets are alert to any hint that Trump can really threaten the Fed’s independence. This was most clearly shown at the end of last month, with Dow Jones and the S&P 500 crashed after the president threatened to expel Powell from his position.

24 hours later Trump withdrew, telling the media: “I don’t intend to shoot [Powell]S I would like to see him be a little more active about his idea of ​​lowering interest rates. This is the perfect time for lowering interest rates. If he is not the end? No, no, it’s not, but it would be a good time. “

The presidents of the Regional Federal Reserve Bank have also unpacked thinking about FortuneWith Chicago, the rest of the gulsi explains: “The Federal Reserve Act was created precisely so that the term of office of the President of the Fed is not on an election cycle. This is not a normal politically appointed.

“There is a federal election in the United States every two years: Will Fed not do his job every second year because there are elections?”

This story was originally presented on Fortune.com

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