Jerome Powell dismisses Trump’s criticism of ‘political’ Fed as ‘cheap shot’

The US Federal Reserve chair, Jerome Powell, pushed back hard against claims the central bank allows politics to drive decisions, in the midst of an extraordinary battle over its independence.

Donald Trump, who is seeking to increase his administration’s control over the Fed, has branded Powell “a very political guy” after he declined to bow to the president’s public demands for drastically lower interest rates.

The White House has launched an unprecedented campaign to overhaul the Fed’s rate-setting board of governors, installing an administration official and trying to fire a Biden appointee over unconfirmed claims of mortgage fraud.

But on Tuesday, Powell, who is typically diplomatic when speaking publicly, roundly dismissed one of the common allegations made by Trump and his allies: that the Fed is somehow political when making key decisions about the world’s largest economy.

“Many people don’t believe” the Fed is simply allowing economic data to drive its decisions, Powell acknowledged at an event in Rhode Island. “But the truth is, mostly people who are calling us political, it’s just a cheap shot.”

He did not mention Trump by name. But the president has become the most prominent critic of the Fed and Powell since returning to office.

It comes a week after the central bank ordered its first rate cut since December, a move to stabilize a wobbling labor market, even as Trump’s tariffs continue to push up prices.

“Near-term risks to inflation are tilted to the upside and risks to employment to the downside – a challenging situation,” Powell reiterated on Tuesday.

Stephen Miran, the Trump official now serving as a Fed governor, takes a different view. He dissented from every other policymaker on the central bank’s board of governors last week to advocate for a deeper rate cut.

“Relatively small changes in some good prices have led to what I view as unreasonable levels of concern,” Miran argued in a speech earlier this week, claiming that tariffs would ultimately lead to “substantial swings in net national savings” for the country.

Reuters contributed reporting