The chairman of the US central bank has responded to rumors that his position is under threat as Donald Trump prepares to take office in Washington.
Jerome Powell, chairman of the Federal Reserve, stated that he would not resign if Trump requested him to do so, and that the White House cannot “force him out” under law.
Mr Powell was replying to reporters’ questions at a press conference after the bank announced a reduction in borrowing rates, dropping the Fed’s main lending rate to a range of 4.5%-4.75%.
Forecasters predict borrowing costs to decrease further in the months ahead, but warned that Trump’s promises for tax cuts, immigration, and tariffs may retain pressure on inflation and drive up government spending.
Trump has threatened to slam import charges of at least 10% on all items entering the nation, which analysts say will be passed on to consumers, driving up prices.
Tax cuts might further boost inflation by increasing spending, whereas Trump’s promised mass deportations of immigrants would leave a large gap in the US labor force, potentially driving up wages.
Interest rates on US debt have already risen this week, reflecting the concerns.
Mr Powell stated on Thursday that it was too early to predict how the new administration’s policies would effect the US economy, or how the Fed should respond.
“It’s such an early stage – we don’t know what the policies are, we don’t know when they will be implemented,” he said. “In the near term, the election will have no effects on our policy decisions.”
Mr Powell was appointed chairman of the Fed by Trump in 2017, but has since become a frequent target of his criticism.
During his first term, Trump referred to bank officials as “boneheads” on social media and allegedly conferred with advisers about firing Powell.
This year, US media reported that Trump associates have been looking into ways for the White House to gain more control over the Fed, including perhaps sidelining Mr Powell by appointing his replacement prematurely.
Trump has consistently stated that he believes he has the right to express his thoughts on Fed decisions. He told Bloomberg over the summer that he would let Powell serve out his term, which ends in 2026, “especially if I thought he was doing the right thing.”