- The Federal Open Market Committee (FOMC) is resisting political pressure from President Trump, who is publicly demanding interest rate cuts and accusing Chair Jerome Powell of playing politics. Despite heightened scrutiny and economic uncertainty from tariffs, FOMC members maintain that monetary policy decisions will be guided solely by economic data to achieve their federally mandated aims.
Whether or not the Federal Open Market Committee (FOMC) wants to engage, the debate over the group’s credibility is raging.
With tariff policy making their decisions all the more difficult and heavily scrutinized, members are taking a united stance that they won’t be cutting rates until they have some further data on economic stability.
This is precisely the opposite of what the White House wants.
After a few weeks off, President Trump has returned to berating the FOMC and its leader, Jerome Powell, for not having cut rates yet.
In addition, Trump is also accusing Powell of playing politics, undermining the FOMC’s federally mandated independence.
“This would be a PERFECT time for Fed Chairman Jerome Powell to cut interest rates,” Trump posted on Truth Social on April 4. “He is always ‘late,’ but he could now change his image, and quickly. Energy prices are down, interest rates are down, inflation is down, even eggs are down 69%, and jobs are UP, all within two months—A BIG WIN for America.
“CUT INTEREST RATES, JEROME, AND STOP PLAYING POLITICS!”
In remarks this week, various FOMC members have begun shaping the message that monetary policy decisions will be made based on economic data—not Trump’s social media outbursts.
“I intend to keep my eye squarely focused on the outlook for inflation,” Jeffrey Schmid, the Federal Reserve Bank of Kansas City president, said on April 10.
“While in theory, tariffs may have only temporary effects on inflation (although persistent effects on the level of prices) I would be hesitant to take too much solace from theory in this environment.”
Speaking to the Secured Finance Network’s independent finance roundtable in Kansas City, Schmid added: “Now, with renewed price pressures likely, I am not willing to take any chances when it comes to maintaining the Fed’s credibility on inflation.”
Questioning the Fed’s credibility has become a habit for the Trump team even before the Republican politician was in the White House.
For example, Trump claimed last year that Powell may lower the base rate in order to benefit the Biden administration and added he would fire Powell—which he is not legally allowed to do—if that happened.
The FOMC did lower rates irrespective of the threat, and Powell remains in the position that Trump appointed him to in his first administration.
Vice President JD Vance then took up the baton, telling CNN’s Dana Bash last year: “Agree or disagree, we should have America’s elected leaders having input about the most important decisions confronting the country.
“It would be a huge change, but whether the country goes to war, what our interest rates are, these are important questions that American democracy should have important answers for, and I think all President Trump is saying is: ‘Look, it’s kind of weird that you have so many bureaucrats making so many important decisions.’”
But FOMC members are reminding the public of their legal mandate, which they must work toward despite politicians’ wishes.
Dallas Fed president Lorie K. Logan added at the Outlook for North American Trade and Immigration conference on Thursday that “as mandated by Congress, the FOMC pursues both maximum employment and price stability.”
Maintaining this price stability is made all the more difficult by tariff uncertainty, she added: “To sustainably achieve both of our dual-mandate goals, it will be important to keep any tariff-related price increases from fostering more persistent inflation. For now, I believe the stance of monetary policy is well positioned.”
Tom Barkin, president and CEO of the Federal Reserve Bank of Richmond, added in an interview this week that independence is “very important” to the FOMC in order to get a broad range of takes from across the nation.
He explained: “We have to try and operate together as efficiently as we can given independence, so there’s always a challenge in terms of aligning the 12 banks in a common direction, as there would be in any decentralized organization.
“We’re all independent and individual … and so there’s a lot of herding cats, I would say, to get us aligned.”
What has Jerome Powell said?
Powell has been consistently clear that his work, and the work of the FOMC, will not be swayed by the influence of the White House.
The rationale for the FOMC’s independence is clear: Federal rates and their impacts on the economy are not levers to be pulled for the convenience of one administration or another; when this independence has been challenged consumers have suffered.
As the face of the FOMC, Powell has had to continually reiterate that he is politically independent and the decisions of the group are based on economic data alone.
“Our monetary policy stance is well positioned to deal with the risks and uncertainties we face as we gain a better understanding of the policy changes and their likely effects on the economy,” Powell told reporters on April 4—after the announcement of Trump’s tariff policies but prior to the confirmation of their 90-day pause.
“It is not our role to comment on those policies. Rather, we make an assessment of their likely effects, observe the behavior of the economy, and set monetary policy in a way that best achieves our dual-mandate goals.”
He added: “We will continue to carefully monitor the incoming data, the evolving outlook, and the balance of risks. We are well positioned to wait for greater clarity before considering any adjustments to our policy stance. It is too soon to say what will be the appropriate path for monetary policy.”
