Federal Reserve Chair Jerome Powell reaffirmed Wednesday that the central bank’s interest rate decisions will remain independent, despite President Donald Trump’s public push for lower rates, the Associated Press reported. Speaking before the House Financial Services Committee, Powell said the Fed will base its moves on economic conditions, not political pressure.
Earlier in the day, Trump called for rate cuts on social media, linking them to his tariff policies. However, Powell signaled the Fed is unlikely to adjust rates soon, citing a need for more progress toward its 2% inflation target. The central bank cut rates three times last year but has since held steady, waiting to see how inflation and trade policies affect the economy.
New government data released Wednesday showed consumer prices rose 3% in January, up from 2.4% in September, making additional rate cuts even less likely. Powell acknowledged the Fed has made “great progress” on inflation but said, “We’re not quite there yet.” The Fed’s current rate policy remains “restrictive,” aiming to curb borrowing and spending.
The Fed lowered its key interest rate from 5.3% to 4.3% last year, and officials previously projected two rate cuts in 2025. However, with inflation still above target, some economists now believe the Fed could delay cuts entirely, while Wall Street expects just one, likely in October.
Powell’s testimony underscores the Fed’s commitment to data-driven policymaking, even as political pressure mounts. Many officials are also wary of how Trump’s tariffs could affect inflation, with some economists warning they may temporarily push prices higher.
