WASHINGTON (AP) — Chairman Jerome Powell said Wednesday that the Federal Reserve’s ability to set interest rates without political interference is necessary for it to make decisions that serve “all Americans,” rather than political parties or specific outcomes. said that it is necessary.
Powell spoke at the New York Times’ Dealbook Summit in response to a question about President-elect Donald Trump’s numerous public criticisms of the Fed and himself.
“We should achieve maximum employment and price stability for the benefit of all Americans, and stay completely out of politics,” Powell said.
The Fed chairman said he was confident there was broad support in Congress for maintaining the central bank’s independence.
“I’m not concerned that there’s a risk of losing legal independence,” he said.
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On interest rates, Powell said the Fed could afford to prudently lower benchmark interest rates because the economy remains strong and inflation has fallen from its peak two years ago.
The Fed is aiming for a “soft landing” for the economy, allowing the central bank to raise interest rates to bring inflation down to its 2% target without triggering a recession. History shows that it is a rare and difficult feat.
But the economy appears largely on track for such an outcome. The job market has slowed. Inflation has also fallen significantly in recent months, although it has remained slightly above the Fed’s target, which could make policymakers reluctant to cut rates further.
Several other Fed officials said this week that they expected further rate cuts, without committing to lower rates at their next meeting later this month.
Christopher Waller, a ranking member of the Fed’s board of governors, said on Monday that he was “leaning” toward lowering rates at the central bank’s meeting in two weeks. Waller, however, added that if upcoming inflation and employment data appear to be worse than the Fed expects, he may support keeping interest rates on hold.
On Tuesday, San Francisco Fed President Mary Daly said she supported further rate cuts, without commenting specifically on the timeline.
“Whether it’s in December or later, that’s an issue that we’ll have an opportunity to discuss and discuss at our next meeting,” Daley said in an interview on Fox Business News. “But the important thing is that we want sustained economic expansion with low inflation, so we have to keep cutting policy to adapt to the economy.”
