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First Post
4 days ago
- Business
- First Post
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. STORY CONTINUES BELOW THIS AD 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. STORY CONTINUES BELOW THIS AD
The Age
06-05-2025
- Business
- The Age
The Fed waits for the fog of Trump's trade war to lift
The US Federal Reserve Board's rate-setting committee is holding a two-day meeting this week. It will again leave interest rates unchanged in the world's largest economy. And Donald Trump will, again, lash out at the Fed's chairman, Jerome Powell. The outcome of the meeting is predictable because the outlook for the US economy is so unpredictable, thanks to the chaos and uncertainty that Trump's ever-evolving trade war on the rest of the world has unleashed. The Fed has adopted a 'wait and see' stance, waiting to see both the final form of Trump's tariffs and the impact they have on inflation, jobs and economic growth, and the final shape of the 'big, beautiful' budget bill with more than $US4 trillion ($6.2 trillion) of tax cuts and some cuts to spending that Congressional Republicans are still trying to pull together. With the 'Big One' – Trump's 'reciprocal' tariffs – paused for 90 days until July, the clouds of uncertainty over the economy won't lift until then, if they do at all, which makes it unlikely that the Fed will cut its policy rate, the federal funds rate, before then. That will disappoint some within financial markets. When Trump announced the pause in the reciprocal tariffs, and more recently when there were signs that the US and China might back away from their tit-for-tat extreme tariff rates (America's 145 per cent rate on imports from China and China's 125 per cent retaliatory tariffs), the sharemarket rebounded, bond yields, which had been surging, fell back and investors priced in as many as four rates cuts this year. The markets are acutely sensitive to any developments in the trade war. The outcome of the meeting is predictable because the outlook for the US economy is so unpredictable. Now, with Powell making it clear that the Fed wants greater clarity before it moves, expectations have become more sober. Markets are pricing in three cuts, but an increasing number of economists anticipate only two, with the Fed seen as unlikely to move before September. That makes sense. While the reciprocal tariffs have been paused, the 10 per cent baseline tariff on all imports remains and appears permanent, as do the 25 per cent tariffs on aluminium and steel imports, some tariffs on automobiles and auto parts, the removal of the exemption from duties for small parcels and massive increases in port charges for Chinese-owned, operated or built ships.
Sydney Morning Herald
06-05-2025
- Business
- Sydney Morning Herald
The Fed waits for the fog of Trump's trade war to lift
The US Federal Reserve Board's rate-setting committee is holding a two-day meeting this week. It will again leave interest rates unchanged in the world's largest economy. And Donald Trump will, again, lash out at the Fed's chairman, Jerome Powell. The outcome of the meeting is predictable because the outlook for the US economy is so unpredictable, thanks to the chaos and uncertainty that Trump's ever-evolving trade war on the rest of the world has unleashed. The Fed has adopted a 'wait and see' stance, waiting to see both the final form of Trump's tariffs and the impact they have on inflation, jobs and economic growth, and the final shape of the 'big, beautiful' budget bill with more than $US4 trillion ($6.2 trillion) of tax cuts and some cuts to spending that Congressional Republicans are still trying to pull together. With the 'Big One' – Trump's 'reciprocal' tariffs – paused for 90 days until July, the clouds of uncertainty over the economy won't lift until then, if they do at all, which makes it unlikely that the Fed will cut its policy rate, the federal funds rate, before then. That will disappoint some within financial markets. When Trump announced the pause in the reciprocal tariffs, and more recently when there were signs that the US and China might back away from their tit-for-tat extreme tariff rates (America's 145 per cent rate on imports from China and China's 125 per cent retaliatory tariffs), the sharemarket rebounded, bond yields, which had been surging, fell back and investors priced in as many as four rates cuts this year. The markets are acutely sensitive to any developments in the trade war. The outcome of the meeting is predictable because the outlook for the US economy is so unpredictable. Now, with Powell making it clear that the Fed wants greater clarity before it moves, expectations have become more sober. Markets are pricing in three cuts, but an increasing number of economists anticipate only two, with the Fed seen as unlikely to move before September. That makes sense. While the reciprocal tariffs have been paused, the 10 per cent baseline tariff on all imports remains and appears permanent, as do the 25 per cent tariffs on aluminium and steel imports, some tariffs on automobiles and auto parts, the removal of the exemption from duties for small parcels and massive increases in port charges for Chinese-owned, operated or built ships.
