Federal Reserve Bank Chair Jerome Powell stayed the course after being summoned to an economic woodshed at the White House by President Trump, who has been vocal about demands that the Fed ax interest rates.
The May 29 faceoff was Powell’s first visit to the White House during Trump’s second tour. In a statement, Powell’s office said the meeting’s agenda was to “to discuss economic developments, including for growth, employment, and inflation.”
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Both sides said the meeting was at the invitation of the president, who told Powell in person what he’s been saying and tweeting for months: the Fed’s refusal to cut interest rates was a “mistake” damaging the economy.
The Board of Governors of the Federal Reserve System voted unanimously in early May to approve the establishment of the primary credit rate at the existing level of 4.5% – which means interest rates for lenders, consumers and the rest of Americans won’t be budging in the near term, much to the dismay of the Trump administration.
This stance “will be updated as appropriate to reflect decisions of the Federal Open Market Committee or the Board of Governors regarding details of the Federal Reserve’s operational tools and approach to implement monetary policy,” the central bank said in a statement.
The Fed faces off against the President on interest rates
Trump’s repeated demands underscore the volatility of U.S. trade policy and provide another flash point for global worries about fiscal policy, which have sent bond yields sharply higher. The whiplashed tariffs, primarily those against China and the E.U., add to economic jitters,
Related: Fed official sends strong message about interest-rate cuts
Since April 2, or “Liberation Day,” tariff threats and trade jitters have spooked buyers and sellers into a seemingly endless roller-coaster ride. Many market, economic, and financial experts have begun publicly warning of a recession within a few months, while others predict a nation stuck in a nasty stagflation.
The Federal Reserve has a dual mandate to target low inflation and unemployment. The central bank can raise interest rates to slow inflation, which can cause unemployment. Or it can cut rates to boost job growth, but that can cause inflation.
Monetary and stock market experts expect the Fed will lower interest rates by one quarter point in September. Trump told Powell in their meeting he wanted the cuts sooner.
Related: Jamie Dimon sends terse message on stocks, economy
The Fed’s statement following the White House meeting said Powell “did not discuss his expectations for monetary policy, except to stress that the path of policy will depend entirely on incoming economic information and what that means for the outlook.”
A White House spokeswoman agreed with the statement, but added that the president pressed for immediate action to lower the rates.
Powell also said in the Fed statement that he and his colleagues will set monetary policy “as required by law, to support maximum employment and stable prices and will make those decisions based solely on careful, objective, and non-political analysis.”
Powell will give the opening remarks June 2 at the Federal Reserve Board’s International Finance (IF) Division 75th Anniversary Conference, Washington, D.C. The conference will feature a series of panel discussions focused on the division’s history and people, as well as an academic panel and presentations by former IF economists.
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