US President Donald Trump renewed his attacks on the US central bank, hours after officials left interest rates unchanged despite his public calls for them to cut.
In a social media post, he accused the Federal Reserve and its chairman Jerome Powell of mishandling the economy, saying they had “failed to stop the problem they created with Inflation”.
The Fed left key interest rate unchanged at its January meeting on Wednesday, in a range of 4.25% to 4.5%, hitting pause after a string of cuts late last year.
Powell said the bank was not “in a hurry” to cut more, given significant uncertainty about where the economy might be headed.
Trump has promised significant changes to the US economy, with calls for sweeping tariffs, mass deportation of illegal migrants, and big cuts to taxes and regulations.
Some economists have warned that some of those policies could put upward pressure on prices, at least in the short-term, concerns Powell said were shared by some at the bank.
Howard Lutnick, Trump’s pick to lead the Commerce Department, defended plans for tariffs and dismissed concerns about the impact on prices at his nomination hearing on Thursday.
But Powell said officials still had little sense of how those plans would shake out.
“The committee is very much in the mode of waiting to see what will happen,” he said at a press conference to discuss the interest rate decision.
The Fed hiked borrowing costs significantly starting in 2022 in an effort to stabilise prices, which were then rising at a pace not seen in decades.
Inflation, the rate of price increases, has since fallen to 2.9% as of December, but remains above the bank’s 2% target.
Trump’s campaign promises included calls for lower interest rates, which would bring relief to borrowers.
It has sparked debate about whether he will respect the tradition of Fed independence, which is meant to keep it focused on the long term health of the US economy and insulated from politics.
Powell told reporters that he had had “no contact” with Trump and the bank was focused on the data in setting rates.
But questions Powell faced about how the Fed is handling a new order from the White House to cancel diversity programmes – and why it had withdrawn from a global group of central banks focused on the risks of climate change to the financial system – underscored the challenges he will face keeping the bank above the political fray.
He said the Fed was reviewing the president’s order and said the group’s focus had expanded into areas too distant from the Fed’s.
“I’m aware of how it can look but it really was not driven by politics,” he said.
