US President Donald Trump continued his criticism of the US central bank shortly after officials opted to keep interest rates unchanged, despite his push for a rate reduction.
In a recent social media post, he blamed the Federal Reserve and its chair, Jerome Powell, for mishandling the economy, alleging they had failed to stop the problem they created with inflation.
The Fed maintained the key interest rate during its January meeting on Wednesday at a range of 4.25% to 4.5%, after implementing several cuts late last year.
Powell stated that the bank was not "rushing" to make further cuts due to significant economic uncertainties.
Trump has pledged substantial changes to the US economy, advocating for extensive tariffs, mass deportation of illegal immigrants, and substantial tax and regulatory cuts.
Some economists have cautioned that these policies could temporarily drive up prices, concerns that Powell acknowledged were shared by some within the bank.
During his Commerce Department nomination hearing, Howard Lutnick, Trump's appointee, defended tariff plans and downplayed worries about price impacts.
However, Powell noted that officials had limited visibility on how these plans would unfold.
The committee is currently in a 'wait and see' mode, Powell expressed during a press conference discussing the interest rate decision.
The Fed began raising borrowing costs notably in 2022 to stabilize prices, which were surging at an unprecedented rate. Inflation, measuring price increases, has dropped to 2.9% as of December but remains above the bank's 2% target.
Trump's campaign vows included advocating for lower interest rates to assist borrowers.
This has sparked a debate about whether he will uphold the convention of Fed independence, designed to maintain a focus on the long-term health of the US economy and shield the institution from political influence.
Powell clarified to reporters that he had not been in communication with Trump and reiterated the Fed's commitment to data-driven rate setting.
Questions posed to Powell about how the Fed is dealing with a directive from the White House to terminate diversity programs, and why it withdrew from a global central bank consortium addressing financial risks related to climate change, highlighted the challenges of keeping the bank free from political entanglements.
Powell assured that the Fed was evaluating the president's directive and explained that the focus of the consortium had broadened to areas outside the Fed's scope.
While appearances may raise concerns, our decisions were made based on non-political reasons, Powell clarified.