Powell Draws Line in Sand: No Resignation Even If Trump Asks

Federal Reserve Chair Jerome Powell has firmly stated his intention to remain in his position, even if re-elected President Donald Trump were to request his resignation. This declaration came after the Fed announced a decision to reduce interest rates by a quarter percentage point on Thursday, bringing the federal funds rate to a range of 4.5% to 4.75%. This move marks the second consecutive rate cut, following a more significant half-point decrease in September, aimed at sustaining the robust growth of the U.S. economy.

During the post-meeting press conference, when directly confronted with the question of whether he would resign if Trump, known for his criticisms of the Fed’s policies, asked him to step down, Powell’s response was immediate and clear: “No.” He further emphasized that the law does not allow for the removal or demotion of any Federal Reserve board leaders, including himself, on grounds that are not legally defined as “for cause.”

Powell also addressed the potential impact of the recent presidential election on monetary policy, asserting that the Fed’s decisions would remain unaffected in the short term. He noted that it is premature to predict how the new administration’s fiscal policies might influence the economy, as the specifics of these policies are still unknown.

The rate cut, which was unanimously agreed upon by Fed officials, reflects a strategic adjustment to maintain economic expansion and labor market strength while ensuring progress towards managing inflation.

Powell explained, “This further recalibration of our policy stance will help maintain the strength of the economy and the labor market and will continue to enable further progress on inflation as we move toward a more neutral stance over time.”

Trump’s economic agenda, which includes aggressive tariffs, immigration restrictions, and tax cut extensions, could potentially drive up inflation and affect long-term interest rates. These policy proposals might compel the Federal Reserve to reconsider its approach to rate adjustments, possibly leading to a more cautious stance on future rate cuts.

Powell’s steadfast position against resigning underscores the Federal Reserve’s independence, a principle that has been central to its operation since its inception. This independence is crucial for the Fed to execute its dual mandate of fostering maximum employment and stabilizing prices without political interference, ensuring that monetary policy decisions are made based on economic data rather than political pressure.

Reference: Bloomberg

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