Fed Reserve Chairman Jerome Powell Responds to Trump's Suggestion He'd Demote Him

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Posted: Jun 19, 2019 4:08 PM
Fed Reserve Chairman Jerome Powell Responds to Trump's Suggestion He'd Demote Him

Source: AP Photo/Manuel Balce Ceneta

The Federal Reserve decided to leave interest rates unchanged on Wednesday, after hiking it four times last year and released the following statement.

Information received since the Federal Open Market Committee met in May indicates that the labor market remains strong and that economic activity is rising at a moderate rate. Job gains have been solid, on average, in recent months, and the unemployment rate has remained low. Although growth of household spending appears to have picked up from earlier in the year, indicators of business fixed investment have been soft. On a 12-month basis, overall inflation and inflation for items other than food and energy are running below 2 percent. Market-based measures of inflation compensation have declined; survey-based measures of longer-term inflation expectations are little changed.

Consistent with its statutory mandate, the Committee seeks to foster maximum employment and price stability. In support of these goals, the Committee decided to maintain the target range for the federal funds rate at 2-1/4 to 2-1/2 percent. The Committee continues to view sustained expansion of economic activity, strong labor market conditions, and inflation near the Committee's symmetric 2 percent objective as the most likely outcomes, but uncertainties about this outlook have increased. In light of these uncertainties and muted inflation pressures, the Committee will closely monitor the implications of incoming information for the economic outlook and will act as appropriate to sustain the expansion, with a strong labor market and inflation near its symmetric 2 percent objective.

In determining the timing and size of future adjustments to the target range for the federal funds rate, the Committee will assess realized and expected economic conditions relative to its maximum employment objective and its symmetric 2 percent inflation objective. This assessment will take into account a wide range of information, including measures of labor market conditions, indicators of inflation pressures and inflation expectations, and readings on financial and international developments.

President Trump had criticized Fed Chair Jerome Powell for his string of interest rate hikes and even suggested demoting him to the Board of Governors, but on Wednesday Powell told reporters that he intends to see through his whole term.

“The law is clear that I have a four-year term and I fully intend to serve it,” he said.

Economist Stephen Moore, who at one time was considered for a seat on the Fed Reserve Board, sounded off on today's decision. To not cut interest rates is an “anti-growth” move, he said during an interview on CNBC. He added that they have made a "catastrophic mistake" on interest rates.