Jay Powell has defended the Federal Reserve’s authority over US monetary policy, as he vowed to “focus on the data” and avoid wading into politics despite calls from the White House and some lawmakers to cut borrowing costs.
The Fed is facing the fiercest challenge to its independence to set interest rates since the 1980s, with Donald Trump claiming during his first week back in the White House that he understood monetary policy better than the central bank. Trump has also said borrowing costs should be lower.
Fed chair Powell told lawmakers on the Senate’s banking committee on Tuesday that the central bank stood a better chance of keeping prices under control if it remained above the fray — and was in turn left to get on with its job of setting interest rates free from political interference.