In a federal game of cat and mouse, President-elect Donald Trump has continued to taunt Jerome Powell and the Federal Open Market Committee (FOMC)—questioning the group’s independence and agenda.
The only problem is, Powell isn’t playing.
The Fed chairman is determinedly shutting down speculation and allegations that he and his FOMC peers are political.
Likewise, Powell is refusing to discuss the Republican politician’s threats over his job, instead saying he’s focussing on the task at hand.
In recent months , the president-elect and his running mate have questioned whether the FOMC should work more closely with the White House, arguing that the base rate should be informed by democratically elected officials .
Yet that argument also roughly translates to political interference—a scenario which has worked disastrously in the past.
“What is the case for the Fed being independent? What does independent mean?” Powell began on-stage at The New York Times’sDealBook Summit on Wednesday.
He explained: “It basically means that we can make our decisions without them being reversed—other than by Congress.
“And that gives us the ability to make these decisions for the benefit of all Americans, at all times. Not for any particular political party or political outcome. We’re supposed to achieve maximum employment and price stability for the benefit of all Americans and keep out of politics completely.”
Keeping out of politics might be easier in theory than practice—especially when the next Commander in Chief has explicitly stated he believes Powell is “political.”
During his election campaign—before the FOMC began lowering the base rate—Trump told Fox News: “It looks to me like [Powell] is trying to lower interest rates for the sake of maybe getting people elected.”
Powell, who has served as Federal Reserve chairman for six years, added that the Fed’s independence is supported on both sides of the hill, saying, “It’s the law of the land.”
“I’m not concerned that there’s some risk that we would lose our statutory independence because I do think that those set of ideas are strongly believed in by people,” Powell added.
Jerome’s job
The incumbent president has also suggested he might fire Powell when he’s appointed to office next month.
From a legal standpoint, the president doesn’t actually have the power to oust a Federal Reserve chairman, though they can nominate the individual for that position.
Ironically, Powell was suggested for the role by Trump himself under his last administration, saying Powell had “demonstrated steady leadership, sound judgment, and policy expertise.”
The entrepreneur-turned-politician has since changed his tune, first saying he’d oust the chairman but later telling Bloomberg “I would let him serve it out, especially if I thought he was doing the right thing.”
That was, of course, before Powell and his peers cut the base rate in September for the first time in years—ahead of the election as Trump had intimidated the FOMC should not do.
By defying Trump, therefore, analysts are questioning whether Powell will be supported to complete his tenure through to 2026.
When questioned onstage in New York, Powell refused to be drawn.
“I never discuss anything that elected officials say so I’m going to disappoint you here,” Powell told journalist Andrew Ross Sorkin. “This is our focus: The U.S. Economy is in very good shape right now, it’s in remarkably good shape.
“We are the sort of envy of other large economies around the world and I want to do everything I can to keep it there during the rest of my term.”
Shadow Powell
Powell, a former lawyer and investment banker, was also tight-lipped but dismissive of proposals from would-be Treasury Secretary Scott Bessent for a shadow Fed chair.
In an interview with Barron’s in October, Bessent said Powell’s successor should be appointed to potentially oversee or shape the monetary polity.
Bessent’s remarks—including the notion that “no one cares what Powell has to say anymore”—were recounted to the Fed chairman in front of the New York audience.
Powell looked back blandly, drawing laughs from the audience, before adding: “I don’t think that’s on the table at all.”
The monetary policy expert added he was “confident” that he would have a constructive working relationship with Bessent, saying: “The Treasury Secretary and the Fed chair have had breakfast or lunch together every week for 75 years … there’s got to be trust and mutual respect and acknowledgement of the different authorities and boundaries that we have.”