Powell Defends Fed's 'Careful' Approach Amid Trump Insults and GOP Pressure

Powell's Defense of the Federal Reserve's Approach

Federal Reserve Chair Jerome Powell on Wednesday defended the central bank's reluctance to cut interest rates amidst questions from Senate Republicans and a barrage of insults from President Trump. During an appearance before the Senate Banking Committee, Powell outlined the Fed's concerns about the economic outlook.

Evaluating Tariff Impacts and Economic Risks

Powell stated that while the Fed is open to evaluating Trump's tariffs, it is unwise to cut rates prematurely. “If we make a mistake here, people will pay the cost for a long time,” he warned.

• Powell emphasized caution amid political pressure.
• The Fed's decisions are made by the FOMC.
• Trump's tariffs add uncertainty to the economy.

Consequences of High Interest Rates

The Fed's pause on rate cuts has sparked retaliation from Trump, who accuses Powell of political maneuvering. However, Powell reiterated the necessity of a careful approach to maintain price stability.

The Economic Climate and Market Forecasts

Economists predict potential adverse effects from tariffs, including inflation and slower growth. “As the people who are supposed to keep stable prices for the benefit of the American people, we need to manage that risk,” Powell stressed.

Political Tensions and Future of Fed

The political tension surrounding the Fed’s decisions raises questions about its future independence. Trump has hinted at seeking a new Fed chair, but analysts believe Powell's term will continue.