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Powell says he’s not worried about the Fed losing its independence under Trump

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Jerome Powell, chairman of the US Federal Reserve, right, speaks during the New York Times DealBook Summit at Jazz at Lincoln Center in New York, US, on Wednesday, Dec. 4, 2024. 

Yuki Iwamura | Bloomberg | Getty Images

NEW YORK — Federal Reserve Chair Jerome Powell said Wednesday he isn’t worried that President-elect Donald Trump will try to politicize the central bank once he takes office in January.

The question of Fed independence has come up over the past several months, amid reports that Trump may try to pull strings on monetary policy both by legislation and possibly by installing a “shadow chair” who could undermine Powell’s authority.

However, Powell said there are safeguards in the congressional legislation that created the Fed that will help preserve it from political influences.

“What does independent mean? It means we can make our decisions without them being reversed,” he told CNBC’s Andrew Ross Sorkin during an on-stage interview at the DealBook Summit.

“That gives us the ability to make these decisions for the benefit of all Americans at all times, not for any particular political party or political outcome,” he added. “We’re supposed to achieve maximum employment and price stability for the benefit of all Americans and keep it out of the politics completely.”

During his first stint in office, Trump hurled sharp criticism at the Fed and Powell, whom he nominated. In the months leading up to this year’s election, Trump advocated for allowing the president a say when the the central bank is making decisions on interest rates.

Though many presidents have tried to exert influence over the Fed, Trump was the most public about it. Still, Powell said he believes there’s strong support in Congress to keep the Fed’s decision-making apart from the political swirl in Washington.

“I think there is very, very broad support for that set of ideas in Congress in both political parties on both sides of the Hill, and that’s what really matters,” he said. “It’s the law of the land, and I’m not concerned that there’s some risk that we would lose our statutory independence.”

Powell provided no clues as to which way he’s leaning on the near-term path for interest rates, though he did note that the Fed can afford to be cautious. As he has said before, Powell said the U.S. economy is “the envy of other large economies around the world.”

The Fed’s next rate decision comes in two weeks. Markets are placing about a 75% probability that the Federal Open Market Committee will cut its key borrowing rate by a quarter percentage point.

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How buy now, payer later apps could be crushing your credit

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Small, everyday purchases like a meal from DoorDash are now able to be financed through eat now, pay later options — a practice that some experts deem “predatory.”

“You’ve got to have enough sense to not follow the urge to finance a taco, okay? You have got to be an adult,” career coach Ken Coleman told “The Big Money Show,” Wednesday. 

“This is predatory, and it’s going to get a lot of people in deep trouble.”

RISKS OF BUY NOW, PAY LATER: ‘TICKET TO OVERSPENDING,’ EXPERT SAYS

klarna, doordash

DoorDash and Klarna are now partnering up to extend buy now, pay later options to consumers. (Reuters, Getty / Getty Images)

Financial wellness experts are continuously sounding the alarm to cash-strapped consumers, warning them of the devastating impact this financial strategy could have on their credit score as some lenders will begin reporting those loans to credit agencies.

Consumers may risk getting hit with late fees and interest rates, similar to credit cards. 

“So your sandwich might show up on your FICO score, especially if you pay for it late,” FOX Business’ Jackie DeAngelis explained.

EXPERTS WARN HIDDEN RISKS OF BUY NOW, PAY LATER

Major players like Affirm, Afterpay, and Klarna have risen to prominence at a time when Americans continue to grapple with persisting inflation, high interest rates and student loan payments, which resumed in October 2023 after a pause due to the COVID-19 pandemic. 

“The Big Money Show” co-host Taylor Riggs offered a different perspective, suggesting that company CEOs have a “duty” to attract as many customers as they want. 

“Unfortunately for me, this always comes down to financial literacy — which I know is so much in your heart about training people to save now by later,” she told Coleman, who regularly offers financial advice to callers on “The Ramsey Show.”

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Coleman continued to come to the defense of financially “desperate” consumers, arguing that companies are targeting “immature” customers. 

“I’m for American businesses being able to do whatever they want to do under the law. That’s fine. But let’s still call it what it is: it’s predatory, and they know who their customers are,” Coleman concluded, “And I’m telling you, they’re talking about weak-minded, immature, desperate people.”

FOX Business’ Daniella Genovese contributed to this report.

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