Federal Reserve Chairman Jerome Powell on Wednesday downplayed the prospect of a conflict between the central bank and the Trump administration regarding trade policy and shrugged off Trump’s criticism that the Fed is undercutting him in negotiating with other nations.
Asked at a press conference whether Trump might influence the central bank’s decision-making, Powell quickly reiterated that the Fed pursues the mandates it has been given by Congress free of political considerations.
“My colleagues and I are focused exclusively on carrying out that mission,” said Powell. “We don’t consider political factors or things like that.”
While noting that the Fed doesn’t conduct trade policy or comment on particular actions, Powell noted the business community’s concern over trade wars started by the White House but also said that the threat of tariffs has not yet damaged the outlook for economic growth.
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“We’ve been hearing a rising chorus of concerns” from the business community over tariffs, Powell said. The Fed chairman added that the outcome of Trump’s staredown with other countries would ultimately matter more than the aggressive tactics that tariffs represent.
If the threat of tariffs leads to lower trade barriers across the world, that would ultimately benefit the U.S. and other countries, Powell said. But, he added, it would damage the U.S. and others economically if tariffs remain raised and become entrenched.
A more protectionist world “[is] a concern, it’s a risk,” said Powell, who said financial markets could begin to react negatively to trade conflict. “You don’t see it yet but you could see retail prices go up,” Powell noted, as far as the effects for everyday Americans.
Still, he downplayed the current tangible effects of tariffs on the overall economy so far.
“It’s hard to see much happening at this point,” said Powell. “They’re still relatively small.”
