Jerome Powell, the Chair of the Federal Reserve, indicated a potential shift in monetary policy as he navigates increasing pressure from President Donald Trump. During a recent event, Powell emphasized, “I’m very focused on just doing my job,” a statement that resonated with the audience and drew applause.
Powell affirmed that a clear majority of Fed policymakers support at least one more interest rate reduction this year. His comments signaled very robust interest in adopting such a regulatory shift. In September, the Fed decided to leave its short-term interest rate unchanged. In reality, it is still between 4.25% and 4.5%. Despite the spike in inflation, the Fed has not raised interest rates in more than half a year. In the time since their last amendment, they’ve held four meetings without revisions.
The Fed’s current approach is characterized by a wait-and-see strategy, particularly as it assesses the potential impacts of Trump’s tariff policies on the economy. Powell’s attention should still be diverted toward the Fed’s dual mandate to control inflation, but maintain maximum employment.
President Trump has made his opposition to the Federal Reserve’s current interest rate policy abundantly clear. He thinks Powell and other central bankers “should be ashamed of themselves” for not doing more aggressive cuts. The President has long claimed to want to see deep cuts across the board, him suggesting deeper cuts will help kickstart local economies and create jobs.
As the Fed prepares for the next rate-setting meetings, Powell stated, “I wouldn’t take any meeting off the table or put any on the table.” In addition to today’s meeting, the central bank has three more meetings on the calendar for all of 2025. The initial convening is scheduled for July 29 & 30.
The deep public concern that Trump was intentionally undermining the independence of the Federal Reserve only intensified. Christine Lagarde, President of the European Central Bank, stated her support for Powell’s independence at an event earlier this month. She remarked, “I speak for myself but I speak for all my colleagues on this panel, who would do the exact same thing as Jay Powell.”
