The Fed's timing for interest rate cuts won't have anything to do with the presidential election, Powell says

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The Fed's timing for interest rate cuts won't have anything to do with the presidential election, Powell says
Federal Reserve Bank Chair Jerome Powell speaks during the Stanford Business, Government and Society Forum at Stanford University on April 03, 2024 in Stanford, California. Justin Sullivan/Getty Images
  • Fed Chair Jerome Powell said it's still too soon to feel confident in cutting interest rates.
  • But he emphasized that the timing for any rate cuts will not have anything to do with the election.
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The head of the Federal Reserve wants to be clear: the nation's central bank has nothing to do with politics.

On Wednesday, Fed Chair Jerome Powell joined Stanford's Business, Government, and Society Forum to discuss the economy and monetary policy with Google CEO Sundhar Pinchai.

The discussion comes after the Fed maintained its interest rate level in its most recent decision in March. While the Federal Open Market Committee forecast three interest rate cuts in December, Powell said on Wednesday that it'll take more data for the Fed to feel confident enough to implement that relief.

"On inflation, it is too soon to say whether the recent readings represent more than just a bump," Powell said, referring to the slight increase in inflation to 3.2% in March.

"We do not expect that it will be appropriate to lower our policy rate until we have greater confidence that inflation is moving sustainably down toward 2%," he said. "Given the strength of the economy and progress on inflation so far, we have time to let the incoming data guide our decisions on policy."

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That still leaves the door open for cuts later in the year — but Powell also wanted to be clear that any timing for the rate cuts will not have anything to do with the timing of the presidential election in November.

"Our analysis is free from any personal or political bias, in service to the public," he said. "We will not always get it right — no one does. But our decisions will always reflect our painstaking assessment of what is best for our economy in the medium and longer term — and nothing else."

Powell has repeatedly emphasized that his role in the Fed is not to be a policymaker. Still, former President Donald Trump accused Powell in February of planning to strategically time interest rate cuts with the election to "help the Democrats."

"I think he's going to do something to probably help the Democrats, I think, if he lowers interest rates," Trump told Fox News, adding that "it looks to me like he's trying to lower interest rates for the sake of maybe getting people elected."

While the timing of a cut has a chance of coinciding with the election, Powell said staying out of political discussions is a key way for the central bank to "maintain the public's trust."

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"Fed policymakers are often pressed to take a position on issues that are arguably relevant to the economy but are not within our mandate, such as particular tax and spending policies, immigration policy, and trade policy," he said.

Even so, some Democratic lawmakers have been urging him to cut rates to relieve Americans of the high prices they're facing. A group of them sent a letter to Powell in March asking him to "seriously consider the harmful economic consequences of maintaining excessively high interest rates for an unnecessarily long period of time."

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