Federal Reserve Chairman Jerome Powell said the central bank’s rate decision was not a result of political pressure.
“We never take into account political considerations. There’s no place in our discussions for that. We also don’t conduct monetary policy in order to prove our independence,” Powell said at a news conference Wednesday.
The Fed dropped the target range for its overnight lending rate to 2% to 2.25%, or 25 basis points from the previous level, marking the first rate cut since December 2008.
President Donald Trump has been putting increasing pressure on the central bank, even calling for it to deliver a 50 basis point cut just a day ahead of the Fed announcement.
“I’d like to see a large cut, and I’d like to see quantitative tightening immediately stopped,” Trump said Tuesday. “They moved in my opinion far too early and far too severely, and puts me at somewhat of a disadvantage,” he added.
However, Powell said the rate cut was essentially “a midcycle adjustment to policy,” which differs from a “lengthy cutting cycle.” The chairman added there was “definitely an insurance aspect” to the cut.
Trump has repeatedly said the Fed should have acted sooner to cut and believes the economy would have been better off without the rate hikes that began in December 2015.
In total, the Fed increased rates nine times in an effort to normalize monetary policy from the extreme accommodation implemented during and after the financial crisis.
— CNBC’s Jeff Cox contributed reporting.