NEW YORK â Federal Reserve Chair Jerome Powell said Wednesday he isn’t worried that President-elect Donald Trump will try to politicize the central bank once he takes office in January.
The question of Fed independence has come up over the past several months, amid reports that Trump may try to pull strings on monetary policy both by legislation and possibly by installing a “shadow chair” who could undermine Powell’s authority.
However, Powell said there are safeguards in the congressional legislation that created the Fed that will help preserve it from political influences.
“What does independent mean? It means we can make our decisions without them being reversed,” he told CNBC’s Andrew Ross Sorkin during an on-stage interview at the DealBook Summit.
“That gives us the ability to make these decisions for the benefit of all Americans at all times, not for any particular political party or political outcome,” he added. “We’re supposed to achieve maximum employment and price stability for the benefit of all Americans and keep it out of the politics completely.”
During his first stint in office, Trump hurled sharp criticism at the Fed and Powell, whom he nominated. In the months leading up to the election, Trump advocated for allowing the president a say when the Fed is making decisions on interest rates.
Though many presidents have tried to exert influence over the Fed, Trump was the most public about it. Still, Powell said he believes there’s strong support in Congress to keep the Fed’s decision-making apart from the political swirl in Washington.
“I think there is very, very broad support for that set of ideas in Congress in both political parties on both sides of the Hill, and that’s what really matters,” he said. “It’s the law of the land, and I’m not concerned that there’s some risk that we would lose our statutory independence.”
Powell provided no clues as to which way he’s leaning on the near-term path for interest rates, though he did note that the Fed can afford to be cautious. As he has said before, Powell said the U.S. economy is “the envy of other large economies around the world.”
The Fed’s next rate decision comes in two weeks. Markets are placing about a 75% probability that the Federal Open Market Committee will cut its key borrowing rate by a quarter percentage point.
