Key takeout
Trump frequently called on Powell to cut interest rates, but the Fed has not done so since Trump took office.
The Fed is not under direct control of the White House, and the Supreme Court recently defended its position as an independent central bank.
The Fed said it will make interest rate decisions based on the economy rather than political considerations.
President Donald Trump has not put pressure on cutting interest rates.
The White House said Trump first met Federal Reserve Chairman Jerome Powell in his second term. At a meeting called by the president, Trump reportedly criticized Powell for not lowering interest rates on the Fed’s benchmark federal funds.
“The president said he believes the Fed Chairman is making a mistake by not cutting interest rates.
The Fed is increasing this year’s key interest rates this year, discouraging borrowing, spending and combat inflation.
Trump frequently calls for central banks to lower interest rates, and could at least temporarily boost the economy. Powell said on his part that the Fed will make decisions based on the economy rather than political.
“Powell said he and his colleagues on the FOMC will set up monetary policy to support maximum employment and stable prices, as required by the law, and will make these decisions based solely on prudent, objective and non-political analysis,” the Federal Reserve said in a statement on Thursday’s meeting.
In recent years, meetings between the Fed Chairman and the President have been fairly rare. Powell met Trump’s predecessor, former President Joe Biden in 2022, and then he went for at least two years without meeting him.
Trump threatened federal independence in the second term
Powell and Trump often clashed this year over interest rates and the Federal Reserve independence.
Trump threatened to fire Powell at one point, but he has since retreated in recent weeks. Powell said he would not resign if Trump asked, defending the Fed’s position as an independent organisation with a reputation for surpassing political conflict.
The Supreme Court last week accused Powell’s argument of a signed court order that Trump may have the power to remove heads of other independent bodies, saying “the Federal Reserve is a unique, structured, semi-private organization following the clear historical tradition of US First and Second Banks.”
The president has influenced interest rate policies – not the way he wants
The Federal Open Market Committee, the Federal Reserve policy body is made up of members appointed by the president and boards of regional banks that make up the Federal Reserve. Trump appointed Powell as the Fed chair in his first term, and Biden gave him a second, four-year term in 2022.
The Fed has been reluctant to partially fall, fearing Trump’s tariffs will rekindle high inflation that has sparked the pandemic-raised high inflation, which is almost boiled down to the Fed’s 2% annual target.
A lower interest rate can put downward pressure on credit cards, car loans and other debt rates, which can indirectly affect mortgage rates.
