Federal Reserve Chair Jerome Powell says he would not step down if asked by a re-elected Donald Trump, following the Federal Reserve’s decision to lower interest rates by a quarter percentage point. When asked during a post-meeting press conference if he would resign, Powell responded firmly, “No,” emphasizing that the law protects Federal Reserve leaders, including himself, from removal or demotion.
Powell stressed that the upcoming U.S. presidential election would have no influence on the Fed’s near-term monetary policies. He explained that it is too early to predict the timing or nature of potential fiscal policy changes that may come from a second Trump administration. He emphasized that the Federal Reserve’s mandate of price stability and maximum employment would continue to guide decisions.
On Thursday, Federal Reserve officials unanimously decided to lower the federal funds rate to a range between 4.5% and 4.75%. This marked the second consecutive rate cut, following a larger half-point reduction in September, as the central bank sought to safeguard U.S. economic growth. Powell described the move as a “recalibration” aimed at maintaining economic strength and continuing the fight against inflation as the Fed edges toward a more neutral stance over time.
Trump’s re-election has reignited focus on his frequent criticisms of Powell during his first term. Trump publicly considered firing the Fed chair during that period, expressing frustrations over interest rates. Trump’s economic agenda, including plans for tariffs, immigration crackdowns, and tax cuts, could influence inflation and long-term interest rates, potentially limiting the Fed’s flexibility in future rate cuts.
However, Powell reiterated that the central bank does not have sufficient information to gauge how future Trump policies might affect the economy or the Fed’s goals of stable prices and maximum employment. He noted that the Federal Open Market Committee (FOMC) views risks to its inflation and employment goals as balanced but acknowledged economic uncertainty.
Powell also noted that inflation is slowly advancing toward the Fed’s 2% target. While labor market conditions have generally eased, he remarked that unemployment remains low, describing the job market as “solid.” Policymakers have now shifted from larger rate adjustments toward a more cautious approach as they assess future economic conditions.
The U.S. economy expanded by 2.8% annually in the third quarter, driven by strong consumer spending. Although labor market concerns had previously surfaced, employment data pointed to continued resilience. U.S. employers added just 12,000 jobs in October, constrained by severe weather and strikes, while inflation eased to 2.1% in September, just above the central bank’s target.
Powell also addressed the increase in longer-term bond yields leading up to the election, which has pushed up mortgage rates, particularly impacting the already slowed housing market. The S&P 500 surged to a record high after Trump’s victory, but Powell cautioned that the Fed would continue to monitor bond yields before determining their potential impact on economic growth.
Overall, Powell underscored the Fed’s commitment to its dual mandate and expressed no intention to alter its policy path based on political events, reaffirming the independence of the Federal Reserve.
