Federal Reserve Chair Jerome Powell Affirms Independence Amid Trump’s Return as Rates Lowered

 

Federal Reserve Chair Jerome Powell announced he would not resign, even if pressured by President Donald Trump, following the central bank's decision to cut interest rates by a quarter-point on Tuesday. Trump, who has consistently challenged the Fed’s autonomy, previously criticized its officials, labeling them “boneheads,” and suggested he should have influence over rate decisions.

When asked if he would step down if Trump requested it, Powell firmly responded, “no,” and clarified that the president cannot legally demote Fed governors from their roles. The Fed’s recent quarter-point rate cut marks the second consecutive reduction amid easing inflation and rising uncertainty around Trump’s renewed presidency. Interest rates now range from 4.5% to 4.75%, a drop from the peak of 5.25% to 5.5% in recent months.

Recent inflation metrics showed signs of cooling, with the PCE index—the Fed’s preferred inflation measure—falling to 2.1%, close to the 2% target. Meanwhile, the consumer price index (CPI) registered at 2.4% in September, its lowest point in three years. Powell stated that the Fed is cautiously optimistic about inflation moving toward its goal but emphasized that their work is “not done.”

Lower interest rates mean borrowing becomes more affordable, impacting areas like mortgage rates, which have decreased by 1% compared to the previous year. However, fluctuations persist amid election-related market uncertainties.

Trump’s re-election has reignited questions regarding the Fed’s independence, especially as inflation concerns weighed on voters' minds during the recent election. Trump has suggested he would challenge the Fed’s decisions if he disagreed, asserting that he should have “a say” in monetary policy due to his business acumen and instinct. Although Trump indicated he would allow Powell to complete his term through May 2026, he also hinted at wanting influence over the Fed’s direction.

Powell, emphasizing the Fed’s commitment to neutrality, stated that election outcomes do not dictate Fed policy. “We don’t guess, we don’t speculate, and we don’t assume,” he said, underlining that the Fed’s December 10–11 meeting will proceed as planned, guided by economic indicators rather than political shifts.