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In a rare move, US Federal Reserve issues statement reaffirming its non-partisan stance amid Trump's pressure
In a rare move, the US Federal Reserve issued a statment reaffirming its non-partisan stance after the central bank's Chair Jerome Powell met with US President Donald Trump read more
US Federal Reserve Board Chairman Jerome Powell speaks during a news conference following a Federal Open Market Committee meeting at the Federal Reserve in Washington, DC, on Wednesday. AFP
On Thursday, the US Federal Reserve issued a rare but strongly worded statement after the body's Chair, Jerome Powell, met US President Donald Trump at the White House. In the statement, the American central bank reaffirmed its commitment to independence amid pressure from the Trump administration to reduce interest rates.
In the three-paragraph statement, the bank emphasised that it plays a non-partisan role while setting up monetary policies and these regulations are completely derived from economic data. 'Chair Powell did not discuss his expectations for monetary policy, except to stress that the path of policy will depend entirely on incoming economic information and what that means for the outlook,' the statement read.
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According to the statement, Powell told Trump that he and other Fed officials 'will set monetary policy, as required by law, to support maximum employment and stable prices and will make those decisions based solely on careful, objective, and non-political analysis." The stern stance on the matter surprised many since the Fed is known to be extremely reserved and rarely issues such statements.
What does the White House have to say?
During the Thursday White House press briefing after the meeting, Press Secretary Karoline Leavitt said that the Fed's statement is 'correct'. However, she maintained that Trump 'did say that the Fed chair is making a mistake by not lowering rates'. In the past, American presidents showed deference to how the Fed operates, respecting the independence of the Central Bank.
However, in the last few months, Trump has often tried to publicly pressure Powell to lower interest rates, as the Fed did last year . However, central bank officials argue that the American economy went into a tailspin after Trump unleashed a trade war by increasing tariffs on imports from several nations.
While the US stock market was crashing after Trump announced his 'Liberation Day' tariffs, the POTUS took to TruthSocial to send a message to Powell. 'This would be a PERFECT time for Fed Chairman Jerome Powell to cut Interest Rates. He is always 'late,' but he could now change his image, and quickly," he wrote in the post.
Interestingly, Powell was appointed by Trump to the office in 2018, when the Republican firebrand was serving his first term in the White House. However, after Trump came back, he threatened to fire Powell, though it's unclear whether the president has the power to do so.
Last week, the US Supreme Court allowed Trump to follow through on his dismissal of officials on the National Labour Relations Board, the panel that oversees labour disputes. But during the ruling, the judge noted that the Federal Reserve is a 'uniquely structured, quasi-private entity', implying that it likely won't be so easy for Trump to get rid of Powell.
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