Powell Stands Firm on Fed Independence Amid Trump’s Rate Cut Demand

Federal Reserve Chair Jerome Powell reaffirmed the central bank's independence despite President Donald Trump's public call for an immediate interest rate cut. Speaking at the World Economic Forum, Trump demanded the Federal Reserve lower rates “immediately,” raising questions about potential political interference in monetary policy.

Powell, addressing an audience in New York, assured that the Federal Reserve remains insulated from political pressures. “I’m not worried about the Fed losing its independence,” he said, highlighting safeguards in the congressional legislation that created the central bank.

Trump’s demand, however, is unlikely to influence the Federal Reserve’s near-term decisions. According to data from CME Group, the probability of a rate cut this month stands at just 0.5%, indicating that markets expect the central bank to stay its course. Powell refrained from signaling any immediate changes to interest rate policy, emphasizing that the strength of the U.S. economy gives the Fed room for caution.

This clash highlights the tension between the White House’s economic priorities and the Federal Reserve’s mission to maintain monetary stability. As Powell emphasized, the Fed remains committed to impartial decision-making that prioritizes long-term economic health over short-term political objectives.

(Content sourced in part from Market Briefs.)