In a federal game of cat and mouse, President-elect Donald Trump continued mock Jerome Powell and the Federal Open Market Committee (FOMC)—questioning the group’s independence and agenda.
The only problem is, Powell is not playing.
He is the president of the Fed decisively ending the speculation and accusations that he and his FOMC colleagues are political.
Likewise, Powell refuses to discuss the Republican politician’s threats to his job, instead saying he is focusing on the task at hand.
In recent monthsThe president-elect and his vice president have questioned whether the FOMC should work more closely with the White House, arguing that the base rate should be informed democratic elected officials.
Yet that argument also translates roughly to political interference—a scenario that has worked disastrously in the past.
“What is the case that the Fed is independent? What does independent mean?” Powell began on stage at The New York Times DealBook Summit on Wednesday.
He explained: “It basically means that we can make our decisions without being overturned – except by Congress.
“And it gives us the ability to make decisions for the benefit of all Americans, at all times. Not for any political party or political outcome. We should achieve maximum employment and price stability for the benefit of all Americans and stay completely out of politics.”
Keeping out of politics it may be easier in theory than in practice— especially when the next commander-in-chief is expressly stated that he believed Powell was “political”.
During his election campaign — before the FOMC started cutting the key rate — Trump said Fox News: “It seems to me that (Powell) is trying to lower interest rates so that maybe people will be elected.”
Powell, who served as Federal Reserve chairman for six years, added that Fed independence is supported on both sides of the hill, saying, “It’s the law of the land.”
“I’m not worried that there’s a risk that we’ll lose our statutory independence because I think people strongly believe in that set of ideas,” Powell added.
Jeronimo’s work
The incumbent president also suggested he might fire Powell when he is appointed next month.
From a legal point of view, the president doesn’t really have power remove the chairman of the Federal Reserve, although they can nominate an individual for the post.
Ironically, Powell was nominated for the role by Trump himself during his last administration, saying Powell had “demonstrated steadfast leadership, sound judgment and policy expertise.”
The businessman-turned-politician changed his stance in the meantime, he first said he would depose the president, but later Bloomberg said “I would let him serve it, especially if I thought he was doing the right thing.”
That, of course, was before Powell and his colleagues cut the key rate in September for the first time in years — ahead of the election, as Trump has threatened the FOMC should not do.
Defying Trump, therefore, analysts are wondering whether Powell will be supported to finish his term in 2026.
When questioned on stage in New York, Powell refused to withdraw.
“I never debate anything elected officials say so I’m going to disappoint you here,” Powell told reporter Andrew Ross Sorkin. “This is our focus: The American economy is in very good shape right now, it’s in extremely good shape.
“We are kind of the envy of other major economies around the world and I want to do everything I can to keep that there for the rest of my term.”
Shadow Powell
Powell, a former lawyer and investment banker, was also tight-lipped but dismissed proposals from potential prospects Finance Minister Scott Bessent for the shadow Fed chair.
In an interview with Barron’s in October, Bessent said Powell’s successor should be named to potentially oversee or shape monetary policy.
Bessent’s remarks – including the idea that “no one cares what Powell has to say anymore” – were relayed to the Fed chairman before an audience in New York.
Powell looked back politely, prompting laughter from the audience, before adding: “I don’t think that’s on the table at all.”
The monetary policy expert added that he was “confident” he would have a constructive working relationship with Bessent, saying: “The Treasury secretary and the Fed chairman have had breakfast or lunch together every week for 75 years… there has to be trust and mutual respect and recognizing the different authorities and boundaries we have.”
