The Federal Reserve issued a rare, strong-word statement on Thursday after speaking to Donald Trump at the White House on Thursday morning, serving as central bank independence amid pressure from Trump to low interest rates.
The three-paragraph statement highlighted the Fed’s independent, nonpartisan role in setting monetary policy based on economic data.
“Speaker Powell did not discuss his expectations for monetary policy except to emphasize that the policy pathway is entirely dependent on what it means for incoming economic information and outlook,” the statement read.
Powell told Trump that he and other Fed officials would “set monetary policy to support maximum employment and stable prices as required by law, and make these decisions based solely on prudent, purpose and apolitical analysis.”
The Fed, which tends to be highly reserved in official statements, shows that officials are aware of Trump’s pressure campaign and are keen to the Fed’s independence.
During a White House reporter briefing on Thursday, spokesperson Caroline Lewitt said the Fed’s statement was “right,” but Trump said “the Fed’s chairman is making a mistake by not lowering interest rates.”
Historically, the president has paid tribute to the Fed to respect central bank independence. But over the past few months, Trump has tried to publicly pressure Powell, as the Fed did last year, but officials say the economy thrown into the tailspin from Trump’s trade war has not become too volatile.
Trump wrote on social media after Trump’s “liberation day” in early April, which announced the tariff slate that crashed the US stock market:
Powell, who was appointed during Trump’s first term in 2018, resisted pressure from Trump and warned that high tariffs could lead to inflation, saying at the beginning of May that officials were “not in a hurry” to cut interest rates.
“‘Too late’ Jerome Powell is a fool and has no clue,” Trump wrote after the Fed’s meeting.
Trump had previously threatened to fire Powell, but it is unclear whether the president has the power to do so. Last week, the Supreme Court allowed Trump to track down the dismissal of Labor Relations Commission officials. This is a panel overseeing labor disputes, but the judge noted that the Federal Reserve is a “unique structured, semi-private organization.”