Neither pro-democrats nor pro-republicans: the president of the American central bank (Fed) recalled on Wednesday the importance of the independence of his institution vis-à-vis political considerations in the run-up to the presidential election, which does not ” not part” of their thinking.
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“This is my fourth presidential election” at the Fed, said Jerome Powell, interviewed at a press conference.
“Read all the transcripts and see if anyone in any way mentions the upcoming election. This is simply not part of our thinking,” he assured.
“If we go down this path, I don’t know how we would stop,” he insisted.
The Federal Reserve is independent of political power. But its meetings and the possible rate cuts will, in the fall, take place in parallel with the electoral campaign and the presidential election in November.
“We will always do what we think is the right thing to do for the economy. (…) We don’t look at anything else,” said Jerome Powell, and taking other factors into account “would reduce the probability of obtaining good economic results”.
Donald Trump said in early February that the Fed wants to lower rates in 2024 to help the Democrats win the election. During his years in the White House, he criticized the Fed for not having lowered rates enough, according to him.
“Recent research (…) has shown that greater central bank independence is associated with greater price stability, which contributes significantly to long-term growth,” the Treasury Secretary will say, Janet Yellen, Friday during a speech in Arizona, excerpts of which were published Wednesday.
Joe Biden’s current Minister of Economy and Finance was president of the Fed when Donald Trump arrived at the White House in 2017. He did not reappoint her for a second term, as required by the tradition, and replaced it by Jerome Powell — then renewed by Joe Biden.
White House spokesperson Karine Jean-Pierre also assured Wednesday that the independence of the Fed was “good for the economy” and benefited “workers, families and businesses.”
The presidential election will take place on November 5, and the Fed meetings on September 17 and 18, then November 6 and 7.
