Jerome Powell pushes back on Trump pressure, stressing Fed's freedom
Federal Reserve Chair Jerome Powell on Monday obliquely pushed back against President Donald Trump’s pressure to aggressively slash interest rates, quoting a predecessor's insistence that the Fed must be "absolutely free" from politics.
In a short speech introducing a film on former Chairman Marriner Eccles, Powell praised the legacy of Eccles, who headed the Fed from 1934 to 1948 and for whom the central bank’s headquarters is named.
“Perhaps most importantly from my perspective as Fed Chair, he is responsible more than any other person for the fact that the United States today has an independent central bank — a central bank able to make decisions in the long-term best interest of the economy, without regard to the political pressures of the moment,” Powell said.
Powell — who maintained his policy of never directly mentioning the president — noted Eccles‘ push for the Banking Act of 1935, “which strengthened the structural independence of the Federal Reserve,” as well as his role in separating government debt management from monetary policy.
“I leave you with this statement from Marriner, inscribed on a plaque in the Eccles Building: ‘The management of the central bank must be absolutely free from the dangers of control by politics and by private interests, singly or combined,’” Powell said.
Trump has often tweeted that the Fed is clueless and repeatedly urged the central bank to slash rates by a large amount, so the economy can take off like a “rocket ship.”
The Fed has moved to lower rates down two notches since July, pointing to trade tensions, slowing global growth and muted inflation. Fed officials have offered few clues as to whether they will cut rates again at the end of the month, but financial markets are widely expecting them to do so against the backdrop of a shrinking manufacturing sector and other signs of a slowdown.
