I won’t be forced out, says Fed chief Jerome Powell

US Federal Reserve chief Jerome Powell said he would not stand down if asked to by Donald Trump.

Federal Reserve chairman Jerome Powell on Thursday. Picture: Getty Images

Jerome Powell, the head of the Federal Reserve, said that he would not stand down if asked to by Donald Trump as the central bank cut interest rates by a widely expected quarter point.

After cutting the cost of borrowing to a range of 4.5 per cent to 4.75 per cent, the Fed declined to give further guidance on the timing of the next reduction.

Asked whether he would stand down if asked to do so by Trump, Mr Powell replied: “No”.

He added that it was “not permitted under the law” for the president to remove the Fed chair.

Mr Trump appointed Mr Powell in 2017 in his first presidential term and President Joe Biden re-appointed him in 2021.

Mr Trump attacked Mr Powell in 2018 for raising borrowing costs as American stocks tumbled and yields on US government debt began to signal a possible recession.

Mr Trump further criticised the Fed in September for agreeing to a 50 basis point reduction ­shortly before the election. The Fed’s open market committee voted unanimously to cut the cost of borrowing by a quarter of a percentage point as policymakers took note of a job market that had “generally eased” while inflation continued to fall towards the US central bank’s 2 per cent target.

Mr Powell, 71, said of Mr Trump’s victory: “In the near term the election will have no effects on our policy decisions. We don’t guess, speculate and we don’t ­assume what future government policy choices will be.”

Paul Ashworth, chief North America economist at Capital Economics, said: “Despite fears that Trump will undermine the Fed’s independence during his second term, we suspect the ­central bank will escape relatively unscathed. We don’t expect Trump to try firing Powell.”

Mr Powell “stayed clear of commenting on the election outcome”, Nationwide chief economist Kathy Bostjancic told Agence France-Presse on Thursday. “But I do think as we get into 2025 they are going to have to consider that.”

Polls and surveys indicate that Mr Trump’s victory was aided by unhappiness over a post-pandemic surge in US inflation – in which consumer prices rose more than 20 per cent.

Thursday’s decision adds to a previous rate cut in September, when the Fed kicked off its easing cycle with a larger half-point decrease, and pencilled in additional rate reductions this year.

The Fed’s favoured inflation gauge has since eased to 2.1 per cent in September, while economic growth has remained robust.

Hours before the Fed decision, the Bank of England reduced its key interest rate by a quarter of a point to 4.75 per cent. Lindsay James, investment strategist at British wealth manager Quilter Investors, said: “On both sides of the pond we are seeing expectations for future rate cuts being scaled back considerably compared to what many had originally hoped for.

“The Fed’s monetary policy committee will be acutely aware that Trump’s policies could be significantly inflationary, primarily due to the impact of tariffs being passed on to consumers while lower taxes heat up the economy.

“In the UK, it is looking ­increasingly likely that rates will no longer fall below 4 per cent in 2025, and in the US it seems interest rates will stay higher for longer as the Fed will need to tread very carefully until it is better able to assess the true impact of Trump’s plans.”

On Wall Street, equity markets continued their record-breaking run. In New York the broadly based S&P 500 reached its 49th record close of the year, up 0.7 per cent to 5973.10, while the Nasdaq Composite had its 30th record close of the year, gaining 1.5 per cent to close at 19,269.46.

THE TIMES