Powell, Jerome H

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What Trump’s Win Means for the Federal Reserve and Jerome Powell

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Donald J. Trump spent his first presidency on a collision course with America’s central bank. Will it intensify?Donald J. Trump spent his first presidency attacking the Federal Reserve, pushing policymakers to cut interest rates and calling Fed officials names that ranged from “boneheads” to “enemy.”That rhetoric is likely to make a return to the White House with Mr. Trump. The Republican has been promising that interest rates will come down on his watch — even though rates are set by the politically independent Fed and the president has no direct control over them.The question looming over markets and the Fed itself is whether Mr. Trump will do more than just talk this time as he tries to get his way. The Fed is in the process of cutting rates, but it is unclear whether it will do so fast enough to please Mr. Trump.Congress granted the Fed independence from the White House so that central bankers would have the freedom to make policy decisions that brought near-term pain but long-term benefits. Higher rates are unpopular with consumers and with incumbent politicians, for instance, though they can leave the economy on a more sustainable path over time.But some in Wall Street and in political circles worry that the Fed’s insulation from politics could come under pressure in the years ahead. Here’s what that might look like.Trump Could Shake Up Fed PersonnelMr. Trump first elevated Jerome H. Powell, the Fed chair, to his current role in early 2018. He then quickly soured on Mr. Powell, who resisted his calls to sharply lower interest rates.We are having trouble retrieving the article content.Please enable JavaScript in your browser settings.Thank you for your patience while we verify access. If you are in Reader mode please exit and log into your Times account, or subscribe for all of The Times.Thank you for your patience while we verify access.Already a subscriber? Log in.Want all of The Times? Subscribe. More

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    Here’s What to Watch as the Fed Meets Thursday

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    Federal Reserve officials are widely expected to cut rates by a quarter point, as uncertainty about a second Trump presidency looms large.Federal Reserve officials are widely expected to cut interest rates on Thursday. The bigger focus will center on what comes next for America’s central bank.Fed officials are cutting interest rates in response to months of slowing inflation. Policymakers lowered borrowing costs for the first time in four years in September, reducing them by half a percentage point. Officials projected two more smaller rate cuts in 2024 and a string of further reductions in 2025.But a combination of stronger recent economic data and President-elect Donald J. Trump’s return to the White House could muddle that outlook.The job market, which seemed wobbly when the Fed last met in September, has since stabilized. Consumer spending has remained strong, and overall growth looks solid. Those developments suggest that rates might not need to come down as much or as quickly in order to keep the economy steady.And if Mr. Trump follows through on his campaign promises, they could make it more difficult for the Fed to continue lowering interest rates as quickly. He has pledged a combination of tax cuts, tariffs and deportations that economists and Wall Street investors think could fuel inflation.“The main takeaway is that his election injects a higher degree of uncertainty into the outlook both for growth and for inflation,” said Blerina Uruci, chief U.S. economist at T. Rowe Price.We are having trouble retrieving the article content.Please enable JavaScript in your browser settings.Thank you for your patience while we verify access. If you are in Reader mode please exit and log into your Times account, or subscribe for all of The Times.Thank you for your patience while we verify access.Already a subscriber? Log in.Want all of The Times? Subscribe. More

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    Trump Brags About His Math Skills and Economic Plans. Experts Say Both Are Shaky.

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    In a combative interview, the former president hinted at even higher tariffs as an economic magic bullet.Former President Donald J. Trump has been offering up new tax cuts to nearly every group of voters that he meets in recent weeks, shaking the nerves of budget watchers and fiscal hawks who fear his expensive economic promises will explode the nation’s already bulging national debt.But on Tuesday, Mr. Trump made clear that he was unfazed by such concerns and offered a one-word solution: growth. Despite the doubts of economists from across the political spectrum, Mr. Trump said that he would just juice the economy by the force of his will and scoffed at suggestions that his pledges to abolish taxes on overtime, tips and Social Security benefits could cost as much as $15 trillion.“I was always very good at mathematics,” Mr. Trump told John Micklethwait, the editor in chief of Bloomberg News, in an interview at the Economic Club of Chicago.Faced with repeated questioning about how he could possibly grow the economy enough to pay for those tax cuts, Mr. Trump dismissed criticism of his ideas as misguided. He professed his love of tariffs and insisted that surging output would cover the cost of his plans.“We’re all about growth,” Mr. Trump said, adding that his mix of tax cuts and tariffs would force companies to invest in manufacturing in the United States.The national debt is approaching $36 trillion. The Committee for a Responsible Federal Budget projected last week that Mr. Trump’s economic agenda could cost as much as $15 trillion over a decade. Economists from the Peterson Institute for International Economics, a nonpartisan think tank, estimated last month that if Mr. Trump’s plans were enacted, the gross domestic product could be 9.7 percent lower than current forecasts, shrinking output and dampening consumer demand.We are having trouble retrieving the article content.Please enable JavaScript in your browser settings.Thank you for your patience while we verify access. If you are in Reader mode please exit and log into your Times account, or subscribe for all of The Times.Thank you for your patience while we verify access.Already a subscriber? Log in.Want all of The Times? Subscribe. More

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    Powell Points to Two More Normal-Size Rate Cuts This Year

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    Jerome H. Powell, chair of the Federal Reserve, said that central bankers will lower rates as much as needed, but have forecast two more quarter-point rate cuts this year.Jerome H. Powell, the chair of the Federal Reserve, underscored on Monday that officials are likely to lower interest rates in the coming months — but that policymakers do not expect to make those rate cuts in large increments if the economy shapes up as expected.Fed officials lowered interest rates by half a percentage point, or 50 basis points, at their meeting on Sept. 18, the first reduction in more than four years. Policymakers usually cut borrowing costs in quarter-point increments, so that was an unusually large decrease.The move came as the Fed made notable progress in its fight against rapid inflation. Price increases have slowed substantially since their 2022 peak, which meant that the high interest rates the Fed had maintained since mid-2023 were no longer seen as necessary.Now, the question is how quickly central bankers will ease off in the months ahead. Speaking to business economists at a conference in Nashville on Monday, Mr. Powell pointed to economic projections that Fed officials released following their recent meeting. Those showed that policymakers thought they would lower rates by another half percentage point by the end of 2024.“That would mean two more cuts, it wouldn’t mean more 50s,” Mr. Powell said, referring to 50-basis-point cuts. “Of course, that will depend on the data. But ultimately, that’s what the baseline is.”The Fed is facing two big risks as it approaches its upcoming policy decisions in November and December.We are having trouble retrieving the article content.Please enable JavaScript in your browser settings.Thank you for your patience while we verify access. If you are in Reader mode please exit and log into your Times account, or subscribe for all of The Times.Thank you for your patience while we verify access.Already a subscriber? Log in.Want all of The Times? Subscribe. More

  • 138 Shares99 Views

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    After Fed Cuts Rates, Biden Will Claim Credit for Economy’s Strength

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    The president’s speech on Thursday won’t be a “victory lap,” officials said, but it will celebrate falling inflation and borrowing costs along with solid growth.President Biden is set to declare on Thursday that the economy has finally reached a turning point he has long sought. With price growth cooling and borrowing costs beginning to fall, he will cast the economic moment as vindication for his often-criticized management of the recovery from the pandemic recession.But Mr. Biden will stop short of “declaring victory” over inflation in his speech to the Economic Club of Washington, administration officials said.Instead, the president will stress the need for further action to bring down the costs of housing, groceries and other daily necessities that continue to frustrate American consumers. That is a nod to the politics of price growth, which are challenging for Vice President Kamala Harris as she seeks to succeed Mr. Biden in the November presidential election.“The president knows this is no time for a victory lap, which is why he will talk about the work ahead,” Jeffrey Zients, the White House chief of staff, told reporters on Wednesday.Still, Mr. Biden appears poised to more boldly claim credit for the economy’s performance than he has in recent months. The president and Ms. Harris have struggled to shake off voter discontent over an inflation surge earlier in his presidency that has left many Americans with a lingering case of sticker shock.In recent weeks, the president has been buoyed by a run of good news on prices, including for gasoline, groceries and the overall inflation rate, as well as the first report of rising real incomes for the typical American since the pandemic began. Mortgage rates have fallen from their recent highs, and on Wednesday, the Federal Reserve cut interest rates by half a percentage point and signaled further cuts this year.We are having trouble retrieving the article content.Please enable JavaScript in your browser settings.Thank you for your patience while we verify access. If you are in Reader mode please exit and log into your Times account, or subscribe for all of The Times.Thank you for your patience while we verify access.Already a subscriber? Log in.Want all of The Times? Subscribe. More

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    Fed Cuts Interest Rates for First Time in Four Years

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    Fed officials kicked off rate cuts with a half-point reduction, confident that inflation is cooling and eager to keep the job market strong.The Federal Reserve cut interest rates on Wednesday by half a percentage point, an unusually large move and a clear signal that central bankers think they are winning their war against inflation and are turning their attention to protecting the job market.“Our patient approach over the past year has paid dividends,” Jerome H. Powell, the Fed chair, said during his news conference. But now “the upside risks to inflation have diminished, and the downside risks to unemployment have increased.”The Fed’s decision lowers rates to about 4.9 percent, down from a more than two-decade high.The pivot comes in response to months of fading inflation, and it is meant to prevent the economy from slowing so much that the job market begins to weaken more painfully. Officials have been keeping a careful eye on a recent uptick in the unemployment rate, and by starting off with a big cut, the Fed is in effect taking out insurance against a bigger employment slowdown.Reinforcing that cautious message, the decisive reduction came alongside economic projections that suggested a more rapid pace of rate cuts than officials had envisioned just a few months ago. Officials now expect to make another half-point reduction before the end of the year.“We’re going to take it meeting by meeting,” Mr. Powell said. “We made a good, strong start to this, and that is frankly a sign of our confidence, confidence that inflation is coming down.”Jerome H. Powell, the Fed chair, said that the central bank would take future interest rate cuts “meeting by meeting” after lowering rates by a half percentage point, an unusually large move.Tom Brenner/ReutersWhere Fed Officials Expect Rates Will Be More

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    What Trump Has Said About Interest Rates, and Why It Matters

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    Federal Reserve officials do not answer to the White House and they insist that they do not take politics into account when they are setting interest rates. But because borrowing costs have a big effect on the economy and the nation’s economic vibe, the central bank’s decision on Wednesday is sure to draw political attention.Former President Donald J. Trump regularly promises to bring interest rates down if he is elected president again — even though the president has little to no direct impact on borrowing costs. While in office he publicly railed against the Fed for taking too long to cut rates, to little avail.And Mr. Trump has remained focused on the Fed as it approaches its first rate cut in more than four years.“You’ll see, they’ll do the interest rate cut and all of the political stuff tomorrow,” Mr. Trump said during a town hall in Michigan this week. “Will he do a half a point? Will he do a quarter of a point? But the reason is that the economy is not good. Otherwise you wouldn’t be able to do it.”In fact, Mr. Trump has suggested repeatedly that it would be political of the Fed to cut borrowing costs in the weeks leading up to the election. Rate cuts are “something that they know they shouldn’t be doing,” he told Bloomberg Businessweek earlier this year. At another point he told Fox News that lower rates would “help the Democrats.” He has since suggested that presidents should “have a say” on interest rates, though he later walked the comment back.Vice President Kamala Harris, the Democratic nominee, has largely avoided talking about the Fed. While President Biden steers clear of saying what the Fed should do, he has at times tiptoed close to doing so, including earlier this year when he said he “bet” that interest rates were going to come down.We are having trouble retrieving the article content.Please enable JavaScript in your browser settings.Thank you for your patience while we verify access. If you are in Reader mode please exit and log into your Times account, or subscribe for all of The Times.Thank you for your patience while we verify access.Already a subscriber? Log in.Want all of The Times? Subscribe. More

  • 163 Shares169 Views

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    As Federal Reserve Readies Interest Rate Cut, Risks to Job Market Still Loom

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    The Federal Reserve is poised to lower interest rates this week. Recent jobs data have been a reminder that a soft landing is not yet assured.An object in motion stays in motion. Is a labor market trend that’s well underway any different?That’s the question looming for officials at the Federal Reserve as they try to pull off a feat that has never really been accomplished before: gently cooling an economy that was experiencing rip-roaring inflation without tanking the job market in the process.So far, the Fed’s attempt at a soft landing has worked out better than just about anyone, including central bankers themselves, expected. Inflation has cooled significantly, with the Consumer Price Index down to 2.5 percent from a peak of 9.1 percent just two years ago. And even with the Fed’s policy interest rate at its highest level in more than two decades, consumer spending has held up and overall growth has continued to chug along.Fed officials are eager to keep it going. That is why all signals suggest that they will lower interest rates at the conclusion of their meeting on Wednesday — and the only real question is whether they will cut them by a typical quarter of a percentage point or by a half percentage point. They are also likely to forecast that they will lower interest rates further before the end of the year, perhaps predicting that they will cut them by a full point from their current 5.33 percent.But even as the Fed turns an important corner on its fight against inflation, real risks remain. And those center on the labor market.Unemployment has been slowly, but steadily, rising. Wage growth has been consistently slowing. Job openings have come down, and hiring rates have come down along with them. And while all of those developments are what the Fed wanted — the point of this exercise was to slow an overheated job market and prevent it from fueling future inflation — central bankers have been clear that they do not want to see it continue.“We do not seek or welcome further cooling in labor market conditions,” Jerome H. Powell, the Fed chair, said in his latest speech.Unemployment and Underemployment RiseThe jobless rate historically jumps during recessions.

    Notes: Unemployment is the share of people actively looking for work; underemployment also includes people who are no longer actively looking and those who work part time but would prefer full-time jobs. Seasonally adjusted.Source: Bureau of Labor StatisticsBy The New York TimesWage Growth Is Cooling SteadilyAfter spiking in 2022, wage gains for rank-and-file workers have been coming down.

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    Year-over-year change in average hourly earnings
    Note: Data is for production and nonsupervisory employees and is not seasonally adjusted.Source: Bureau of Labor StatisticsBy The New York TimesJob Openings Fall, Just as More People Look for ThemAfter years in which jobs were much more plentiful than available workers, that ratio is on the cusp of flipping.

    Data are seasonally adjusted.Source: The Bureau of Labor StatistticsBy The New York TimesWe are having trouble retrieving the article content.Please enable JavaScript in your browser settings.Thank you for your patience while we verify access. If you are in Reader mode please exit and log into your Times account, or subscribe for all of The Times.Thank you for your patience while we verify access.Already a subscriber? Log in.Want all of The Times? Subscribe. More