Jerome Powell responds to Donald Trump. The president of the American Central Bank, the Fed, insisted on Thursday evening that the institution responsible for monetary policy was independent, and that the executive power could not influence it, while the election of Donald Trump arouses criticism. concerns.
The Fed's decisions cannot be overturned by any other part of the government, except, of course, Congress “, declared Jerome Powell, during a question-and-answer session in Dallas (Texas).
The Federal Reserve (Fed) cuts rates but remains cautious over 2025
Of ” lots of research “, carried out on the subject, “ show that central banks which are independent (…) from other parts of the government, do a better job in terms of inflation ». « And that makes perfect sense, because … we don't think about other political factors that, frankly, would distract from the already difficult work that we have to do “, he added.
Trump wants to take control of the Fed
This argument is obviously a response to Donald Trump who has not hidden his wish to influence the decisions of the central bank, which raises and lowers rates according to economic developments. In August, he estimated that “ the president should at least have a say ».
When the institution began a first rate cut in September, less than two months before the November 5 election, Donald Trump accused it of playing the game of the Democratic candidate. Already during his first mandate, he had broken with custom and commented on these decisions. “ We don't think, when we make our decisions, about the well-being of a political party or anything like that. We just look at the macroeconomic aspects and do our best », assured Jerome Powell.
This is not the first time that the American Federal Reserve has reacted to Donald Trump's threats. Thursday morning, it was a Fed governor, Adriana Kugler, who gave a speech in which she insisted on the need to have an independent central bank. A week before, Jerome Powell during the press conference he held after the Fed meeting, he curtly replied: non » to a journalist who asked him if he was considering resigning. And he recalled that forcing him to leave was “ prohibited by law “. This Thursday, the president of the Fed added another layer by saying “ I will serve until the end of my term as president, and that is all I have decided ».
A strategy focused on lowering rates
The American central bank therefore plans to stick to its plan to gradually reduce its key rates. With this in mind, Jerome Powell praised the performance of the American economy on Thursday: “ the recent performance of our economy has been remarkably good, by far the best of any major economy in the world “. GDP growth almost twice as high as in the euro zone, unemployment rate still low, and inflation which has fallen drastically: the health of the American economy remains very good, having simply cooled after a period of overheating.
« The economy is sending no signals that we need to hurry to cut rates “, he declared, specifying that “ the current strength of the economy gives us the opportunity to approach our decisions with caution ».
The US Federal Reserve lowered its rates on November 7, for the second time in a row. These are now in the range of 4.50 to 4.75%. Its next meeting will take place on December 17 and 18, and a further drop of a quarter point is expected by market participants, according to the CME Group assessment.
« Inflation is getting much closer to our long-term goal of 2%, but it's not there yet. We are committed to finishing the job », noted Jerome Powell, warning about “ a sometimes bumpy trajectory » to be expected. Inflation also rebounded in October, for the first time since March, to +2.6% over one year against +2.4% in September, according to the CPI index. As for employment, the labor shortage is decreasing, and the unemployment rate remains very low, at 4.1%. “ The labor market has cooled to the point where it is no longer a source of significant inflationary pressures », greeted Jerome Powell.
(With AFP)
