Fed's Powell won't touch Trump's demand for lower rates
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Fed chair Jerome Powell in a news conference Wednesday. Photo: ANDREW CABALLERO-REYNOLDS/AFP via Getty Images.
Last week, President Trump said he will "demand" that the Federal Reserve cut interest rates. Fed chair Jerome Powell declined to comment on the request Wednesday.
Why it matters: The Fed is set to face new pressure from the Trump administration, as it holds rates steady while the president pushes for them to come down.
Driving the news: Powell, in his news conference following a policy meeting, said "I'm not going to have any response or comment whatsoever on what the president said."
- He did indicate that he has had "no contact" with Trump.
- Trump made the comments about lower rates in a virtual address lat week to the World Economic Forum in Davos. Later that day, he told reporters in the Oval Office he'd "put in a strong statement" to the Fed about rates.
What to watch: Trump lambasted Powell and the Fed throughout his first term. His return to the White House so far shows the administration may continue to echo those attacks.
- Trump blasted the central bank shortly after the Fed's decision to keep rates unchanged on Wednesday,
- "If the Fed had spent less time on DEI, gender ideology, 'green' energy, and fake climate change, Inflation would never have been a problem," Trump posted on Truth Social, his social media platform.
- He name-checked Powell, who he nominated in 2017, in the post — saying that the Fed and its leader "failed to stop the problem they created with inflation."
- To be sure, the Consumer Price Index showed inflation was 2.9% in the 12 months ending in December, well-below the peak of 9% in 2022. The run-up in prices stemmed largely from pandemic-era supply chain constraints and strong consumer demand.
The intrigue: Asked about the Fed's efforts around diversity, equity, and inclusion — which Trump's executive orders seek to quash — Powell gave what appeared to be a carefully crafted statement.
- "We're reviewing the orders and the associated detail as they're made available, and as has been our practice over many administrations, we are working to align our policies with the executive orders as appropriate and consistent with applicable law," Powell said.
- "It has been our practice to work to align our policies to those that are mentioned in executive orders," he said later.
Asked about Dodd-Frank Act provisions that indicate the Fed should have offices focused on inclusion, Powell said "I did mention, consistent with applicable law, right?"
