Fed Chair Powell Draws Clear Line in Sand: “Not Stepping Down” Despite Trump’s Return
In a decisive stance that sent ripples through financial markets, Federal Reserve Chairman Jerome Powell made it crystal clear yesterday: he’s not going anywhere, regardless of political pressure from the incoming administration.
The Fed chief’s bold declaration came right after announcing a 0.25 percentage point cut in interest rates, bringing the benchmark rate to 4.5-4.75%. This marks the central bank’s second consecutive rate reduction this year, following September’s larger 0.50 point cut.
“No,” Powell stated firmly when asked if he would resign under pressure from President-elect Trump. When pressed further about whether he could be fired or demoted, Powell’s response was equally direct: “Not permitted under the law.”
This showdown comes at a crucial moment for the U.S. economy. The Fed is balancing its efforts to reduce inflation and maintain economic stability. The economy added just 12,000 jobs in October, the lowest in nearly four years, although experts note that hurricanes in the South and the Boeing strike affected this number.
The timing couldn’t be more interesting. Just two days after Trump’s election victory, Powell is sending a clear message about the Fed’s independence. It’s worth remembering that Trump, who first appointed Powell in 2017, later dubbed him a “bonehead” and frequently criticized his policy decisions.
Looking ahead, the Fed’s path seems carefully planned. “We don’t guess, we don’t speculate, and we don’t assume,” Powell emphasized when asked about adapting to the incoming administration’s policies. This measured approach stands in stark contrast to Trump’s August statement that presidents should have “at least a say” in interest rate decisions, citing his business success as qualification.
The Fed-White House relationship has always been delicate, but it’s about to get more complicated. Trump has promised major economic changes, including:
- Massive tariffs on imports
- Further cuts to corporate tax rates
- Extension of 2017 tax cuts
Financial experts are watching closely. Greg McBride, the chief financial analyst at Bankrate, observed that the Federal Reserve is gradually reducing its intervention. The solid pace of economic growth means the Fed can take a more deliberate approach.”
For those marking their calendars, Powell’s term as Fed chair runs until May 2026, with his position on the Board of Governors extending to 2028. Trump has recently softened his stance somewhat, telling Bloomberg he would let Powell serve out his term “especially if I thought he was doing the right thing.”
The Fed has one more potential rate cut to consider in December before Trump takes office in January. With inflation cooling but still above the Fed’s 2% target, Powell’s team faces tough decisions ahead.
The message from the Fed is clear: political pressure won’t dictate monetary policy. As the U.S. enters what promises to be an eventful 2025, the independence of the Federal Reserve may face its toughest test yet.