Powell rejects political bias claims, calls accusations of Fed bias ‘a cheap shot’
Make us a preferred source
Make us a preferred source on Google
The news: Federal Reserve Chair Jerome Powell dismissed accusations that the central bank is politically motivated, calling them “just a cheap shot,” and said the Fed keeps its “head down” and does its job.
The context: His comments come amid heightened political pressure, including President Trump’s request to the US Supreme Court for an emergency order to remove Fed Governor Lisa Cook from her position, an attempt Cook is challenging in court.
Meanwhile, Stephen Miran, a newly appointed Fed governor, is on unpaid leave from his role as chair of the White House Council of Economic Advisers while also serving on the Fed. His appointment has deepened concerns about the Fed’s independence, with Miran dissenting in favour of a larger rate cut at last week’s meeting and arguing publicly that current rates are much too high. Other Fed officials, however, have urged caution, citing lingering inflation risks and uncertainty.
What they said: Speaking at the Greater Providence Chamber of Commerce, Powell said "many people don't' believe" the Fed is letting the data drive decisions. He added, "but the truth is, mostly people who are calling us political, it's just a cheap shot."
He also said the US economy is facing a “challenging situation,” with “near-term risks to inflation tilted to the upside and risks to employment to the downside – a challenging situation.”
He offered no new signal on rate cuts, repeating that “there is no risk-free path”. Recent job growth, averaging around 25,000 per month for the past three months, is “running below the ‘breakeven’ rate needed to hold the unemployment rate constant,” he said.
Even when other indicators were “broadly stable,” inflation remains “somewhat elevated,” driven in part by tariffs, which have caused a “one-time pass-through” in prices that has been “later and less than we expected,” Powell said. He added the Fed must ensure that this does not “become an ongoing inflation problem.”
As he spoke, the S&P 500 and Nasdaq 100 fell, led by a drop in major tech stocks.
He described the global financial crisis and the COVID-19 pandemic as “two back-to-back world historical crises” that “have left behind scars that will be with us for a long time,” and said that in democracies around the world, public trust in economic and political institutions has been challenged.
The sources: Fed speech, Q&A session, Bloomberg
