Trump vs. The Fed: Powell Refuses to Step Down as Interest Rates Are Cut Again

On November 7, the Federal Reserve implemented its second rate cut since September, reducing the interest rate by an additional 0.25 percentage points to a range of 4.5% to 4.75%. Fed Chair Jerome Powell emphasized that recent economic data, particularly the Personal Consumption Expenditures (PCE) price index, indicate robust economic activity and moderating inflation. However, Powell also highlighted that high interest rates are still impacting job market stability, with October’s unemployment rate up slightly to 4.1% and a decrease in job openings.

This rate cut is meant to keep consumer spending strong and help manage inflation as the economy grows. In the third quarter, the U.S. economy grew by 2.8%, with solid support from consumer spending and business investments, showing that the economy is holding up even as job growth slows. Powell noted that many Americans are still feeling the effects of past high inflation, but steady wage growth could gradually improve public confidence.

Powell also addressed questions about his future as Fed Chair in light of the recent election, affirming that he would not step down if President-elect Donald Trump, who has previously criticized Powell’s leadership, were to ask him to resign. Powell clarified that under the law, a president cannot fire or demote the Fed Chair. He added, "No," when directly asked if he would leave his position at Trump’s request, underscoring his intention to serve until his term ends in May 2026. Powell emphasized that the Fed's rate decisions remain guided by economic data and are unaffected by political changes, noting that any policy shifts under a new administration would only impact the Fed's approach once fully enacted and analyzed.

While further rate cuts may be on hold for now, this latest reduction provides some ongoing relief for those facing high costs on credit cards, auto loans, and other types of debt.