RE:RE:Interest Rate Outlook From Yahoo Finance today: Jerome Powell made it clear Wednesday that he is ready for the inevitable political blowback if the Federal Reserve does in fact cut rates at its September meeting, just seven weeks before Election Day.
When asked at a press conference if the Fed could, in fact, remain apolitical in taking such an action, he said, "I absolutely do."
"Anything that we do before, during, or after the election will be based on the data, the outlook, and the balance of risks, and not on anything else," he added.
The collision of Fed monetary policy and a red-hot election season is now officially in play after Powell signaled the Fed could cut rates at its next meeting on Sept. 17-18 as long as inflation continues to cool.
"We think the time is approaching," Powell said in response to a question from Yahoo Finance.
When asked if there was a growing sense of confidence on the Fed's Federal Open Market Committee that a cut could be made in September, he added, "Yes," as long as the data supported such an outcome.
A September rate cut could cause the central bank to face political criticism from both sides of the aisle in Washington.
Lawmakers from both parties have signaled they would criticize the Fed if a decision made at the last meeting before Election Day didn't go their way.
If Powell and his colleagues choose to keep rates at a 23-year high, a growing chorus of Democratic critics calling for cuts may reach a crescendo.
But if policymakers do indeed cut, Republicans from Donald Trump on down will be sure to cast the move as caving to election year pressure.
In an interview with Bloomberg published earlier this month, the Republican nominee and former president again reiterated that central bank officials should not ease monetary policy before the November election.
"It’s something that they know they shouldn’t be doing," Trump said.
Powell’s response to this mounting wave of political pressure has been to echo an independent, apolitical approach he has honed throughout 2024, emphasizing that the only criteria that he considers will be data on prices and jobs.
He came back to that theme on Wednesday, saying “this is my fourth presidential election at the Fed" and "we never use our tools to support or oppose a political party, a politician, or any political outcome."
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