I won’t allow Trump to force me out, insists Fed chairman

Jerome Powell, the head of the Federal Reserve, said that he would not stand down if asked to by Donald Trump as the central bank cut interest rates by a widely expected quarter point.
After cutting the cost of borrowing to a range of 4.5 per cent to 4.75 per cent, the Fed declined to give further guidance on the timing of the next reduction.
Asked whether he would stand down if asked to do so by Trump, Powell replied: “No”.
He added that it was “not permitted under the law” for the president to remove the Fed chair.
Trump appointed Powell in 2017 in his first presidential term and President Biden re-appointed him in 2021. In 2018 Trump attacked Powell for raising borrowing costs as American stocks tumbled and yields on US government debt began to signal a possible recession.
In September Trump further criticised the Fed for agreeing to a 50 basis point reduction shortly before the election.
Trump will enter the White House for a second term in January after winning the presidential election this week.
The Fed’s open market committee voted unanimously to cut the cost of borrowing by a quarter of a percentage point as policymakers took note of a job market that had “generally eased” while inflation continued to fall towards the US central bank’s 2 per cent target.
Powell, 71, said of Trump’s victory: “In the near term the election will have no effects on our policy decisions. We don’t guess, speculate and we don’t assume what future government policy choices will be.”
Paul Ashworth, chief North America economist at Capital Economics, said: “Despite fears that Trump will undermine the Fed’s independence during his second term, we suspect the central bank will escape relatively unscathed. We don’t expect Trump to try firing Powell.”
Hours before the Fed decision the Bank of England reduced its key interest rate by a quarter point to 4.75 per cent.
Lindsay James, investment strategist at Quilter Investors, the UK wealth manager, said: “On both sides of the pond we are seeing expectations for future rate cuts being scaled back considerably compared to what many had originally hoped for.
“The Fed’s monetary policy committee will be acutely aware that Trump’s policies could be significantly inflationary, primarily due to the impact of tariffs being passed on to consumers while lower taxes heat up the economy.
“In the UK, it is looking increasingly likely that rates will no longer fall below 4 per cent in 2025, and in the US it seems interest rates will stay higher for longer as the Fed will need to tread very carefully until it is better able to assess the true impact of Trump’s plans.”
Capital Economics said: “We now expect the Fed to call time on this loosening cycle a little earlier than before. We anticipate additional 25 basis-point reductions at each meeting until next May, with the rate bottoming out at between 3.5 per cent and 3.75 per cent, 50 basis points higher than our pre-election forecast.”
On Wall Street, equity markets continued their record-breaking run. By the close in New York, the broadly-based S&P 500 was celebrating its 49th record close of the year, up 0.7 per cent to 5,973.10, while the technology-heavy Nasdaq Composite had its 30th record close with a gain of 1.5 per cent to 19,269.02.