Fed’s Powell says Trump’s political attacks didn’t stop rate hikes
Federal Reserve Chairman Jerome Powell said repeated political attacks by President Donald Trump had zero influence on the central bank’s decision to slow down interest rate hikes.
“Not at all. Not at all,” said Powell in an interview with the CBS news program “60 Minutes” on Sunday. “And it’s very important that the public understand that we are always going to make a decision based on what we think is right for the American people.”
Powell explained that the Fed’s decision in January to pause raising rates was because the global economy was showing signs of slowing and other risks to the US economy were rising.
The Fed chairman has repeatedly made the case for a patient, measured approach, describing the US economy in a “good place,” where policy makers “don’t feel any hurry to change our interest rate policy.”
So far this year, central bankers have kept the federal funds rate, which influences the cost of mortgages, credit cards and other borrowing, at a range of 2.25% to 2.5%.
“What we’ve done is we’ve said that we’re going to wait and see how those conditions evolve before we make any changes to our interest rate policy, and that means patient,” Powell said in the interview.
In 2018, the Fed under Powell raised rates four times, all unanimous decisions, despite vigorous debates around the table during the Federal Open Market Committee’s two-day policy setting meetings in Washington.
Since then, Fed officials have pointed to a spike in volatility in financial markets at the end of last year, a slowdown of growth in China and Europe, and uncertainty around unresolved policy issues including trade negotiations with China and the United Kingdom’s exit from the European Union as reasons to be more cautious.
In his interview, the chairman carefully avoided answering any questions about Trump and his unprecedented disparaging attacks on the Fed, which have included calling the institution “crazy” and “out of control” during last year’s string of rate hikes.
“I don’t think it would be appropriate for me to comment on other elected officials or on the President,” said Powell.
When repeatedly pressed whether he had a “rule” about discussing the President, Powell flatly said, “I don’t think it’s appropriate. I really don’t.”
Instead, he said his responsibility is to fulfill the job Congress assigned the Fed: to ensure as many Americans are working as possible and to keep prices stable — a role, he says, he plans to keep until his four-year term expires.
Powell waved off any imminent concerns of a looming recession, saying he anticipates the US economy will grow at a “healthy rate.” The Fed now expects US economic growth to be slower than last year, which was a touch higher than 3%, for the first time in a decade, since the 2008 financial crisis.
He also said he sees no reason why the economic expansion, which will be the longest in history in a few months, won’t continue.
“Eventually expansions come to an end,” said Powell. “The business cycle has not been repealed. But I would say there’s no reason why this economy cannot continue to expand.”