When asked if he would resign if Trump asked him, Powell said: “No,” noting that the president did not have the authority to fire or demote him.
“This is not allowed under the law,” Powell told reporters at a news conference after the Federal Reserve cut interest rates by a quarter of a percentage point, stressing that Trump’s election victory would not have any immediate impact on central bank policy.
He pointed out that the next administration’s policies could have an economic impact that would affect the Federal Reserve’s dual mandate of maximum employment and price stability.
He explained that it is still too early to know this, and that the Federal Reserve does not make any assumptions, adding: “It is an early stage… We do not know what the policies are, and once we know what they are, we will not have knowledge of when they will be implemented.”
According to the CNBC website, investors will closely monitor the controversial relationship between the president-elect and the head of the Federal Reserve.
Trump appointed Powell in 2017, but repeatedly criticized him during his first term as president, arguing that Powell did not ease monetary policy quickly enough.
Trump said in an interview in October that the president should be able to influence interest rate decisions, adding: “I don’t think I should be allowed to ask that, but I think I have the right to make comments about whether interest rates should be… “Rising or falling?”
Source: cnbc
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**Interview with Jerome Powell on Federal Reserve Independence and Political Influence**
**Interviewer:** Thank you for joining us today, Mr. Powell. After the recent decision to cut interest rates, there’s been a lot of discussion about your relationship with President Trump, particularly regarding whether you would resign if asked. Can you clarify your stance on that?
**Jerome Powell:** Thank you for having me. To be clear, I stated that I would not resign if President Trump asked me to. The law does not permit the president to fire or demote me, and my position is intended to be independent of political pressure. Our focus remains on achieving our dual mandate of maximum employment and price stability.
**Interviewer:** Many investors and analysts are keenly observing the dynamics between the Federal Reserve and the incoming administration. How do you see these relationships affecting the Fed’s policy decisions moving forward?
**Jerome Powell:** It’s important to recognize that while the policies of the next administration could influence economic conditions, it’s premature to speculate on specifics. We need to see what the new administration proposes and how those proposals might be implemented. For now, our responsibilities remain focused on the current economic indicators.
**Interviewer:** Given that former President Trump criticized you during his first term, expressing that you should ease monetary policy more quickly, how do you respond to those arguments that suggest the Fed should align more closely with the president’s economic agenda?
**Jerome Powell:** Our independence is crucial for maintaining trust and credibility in our monetary policy. While it’s natural for presidents to express their opinions on economic matters, the Federal Reserve operates based on objective data and the long-term stability of the economy, not political pressures.
**Interviewer:** In light of this, how do you think the public perceives the Fed’s independence? Are there risks associated with political commentary on interest rates as we saw from Trump recently?
**Jerome Powell:** Public perception of the Fed’s independence is vital for its effectiveness. Political commentary can sometimes complicate this perception. It is essential for the Fed to operate without political interference to ensure sound monetary policy and foster confidence among investors and the public alike.
**Interviewer:** Mr. Powell, considering your responses, what do you think the general public would feel about a president’s influence over the Federal Reserve? Do you believe that this could spark a debate on the necessity of a more politically accountable central bank?
**Jerome Powell:** I think it certainly could initiate a debate. It raises questions about the balance between accountability and independence, and differing views on the role of central banks in political matters. What do you, as readers, think about the potential risks and benefits of a president having influence over monetary policy decisions? Should the Fed remain a strictly independent entity, or is there a place for political dialogue in economic governance?
