U.S. Federal Reserve Chairman Jerome Powell reiterated Tuesday the central bank’s independence and said that an interest rate cut this year is still being considered amid shifting economic data.
Powell made clear that the U.S. Federal Reserve will not be influenced by pressure from President Donald Trump, who has called repeatedly for the central bank to cut interest rates and spur the economy and financial markets. As recently as this Monday, the President tweeted that the Federal Reserve "blew it" by not lowering interest rates by now.
However, Powell said the central bank will not be influenced by "short-term political pressures."
"The independence of the Fed from direct political control is an important institutional feature that has served the country well, served the economy well," he said. "When you see central banks lacking those protections, you see bad things happening."
Powell added that global economic conditions might make an interest rate cut this year necessary, saying that economic "crosscurrents have re-emerged, with apparent progress on trade turning to greater uncertainty."
But the Fed Chairman stopped short of guaranteeing a rate cut, saying the central bank will watch how economic events unfold in the coming weeks and months. And any interest rate cuts may be modest at best. The President of the St. Louis Federal Reserve, James Bullard, said earlier this week that he would back a reduction of 0.25 percentage points, rather than the 0.5 percentage point cut anticipated by many investors.
