Fed Cuts Key Interest Rate As Powell Says Trump Can’t Fire Him

The Federal Reserve has cut its key interest rate by a quarter-point, responding to a steady decrease in inflation that contributed to Donald Trump’s recent presidential election victory, Christopher Rugaber reported for the Associated Press (AP).

The Fed has long defended its independence in making challenging interest rate decisions, free from political influence. I Photo: J.M Executive Flickr

The rate reduction follows a larger half-point cut in September and reflects the Fed’s renewed focus on supporting employment while keeping inflation close to the central bank’s 2% target.

When asked how Trump’s election might influence the Fed’s decisions, Fed Chair Jerome Powell said, “In the near term, the election will have no effect on our (interest rate) decisions.”

Trump’s return to the presidency, however, has raised concerns about potential White House interference in the Fed’s policies. Trump has argued that the president should have a say in central bank decisions.

The Fed has long defended its independence in making challenging interest rate decisions, free from political influence. During Trump’s previous term, he publicly criticized Powell for raising rates to control inflation and may do so again.

When asked if he would resign if Trump requested it, Powell, whose second four-year term as Fed chair will have one year remaining when Trump takes office, firmly replied, “No.”

Powell further clarified that, in his view, Trump cannot legally fire or demote him: “It would not be permitted under the law,” he stated, Alex Veiga also reported for AP.