US Federal Reserve Chairman Defends Independence Amid Speculation over Tenure Amid Trump Presidency

Mr Powell has faced heavy scrutiny over the last few years, as prices started surging in 2022.

The bank responding by hiking rates rapidly that year, ultimately raising them from near zero to roughly 5.3% as of July – the highest rate in more than two decades.

Those rises affected the public in the form of higher borrowing costs for credit cards, mortgages and other loans,helping to fuel discontent about higher living costs, especially for housing, that played a role in the election.

The Fed started to reverse course in September, slashing rates by a bigger-than-usual 0.5 percentage points, saying it was confident that the pace of price rises in the US was stabilising.

Inflation in the US stood at 2.4% in September, down from more than 9% in June 2022, according to the latest official figures.

The cut announced on Thursday, which was widely expectedand unanimous, marked the second drop in a row,lowering rates by a further 0.25 percentage points.

Mr Powell said on Thursday officials remained equally focused on keeping prices stable and the job market healthy.

Though concerns flared earlier this year about rising unemployment, those quietened in September, after data showed an unexpectedly strong burst of hiring.

However, the latest figures showed almost non-existent job growth in October, when the country was grappling with hurricanes and strike actions.

Mr Powell said officials expected to continue to cut rates, but how fast and how far remained to be seen. He resisted questions seeking more precise guidance.

“We don’t think it’s a good time to be doing a lot of further guidance – there’s a fair amount of uncertainty,” he said. “The point is to find the right pace and destination as we go.”

Whitney Watson, co-chief investment officer of fixed income at Goldman Sachs Asset Management, said her firm expected to see another rate cut in December, but acknowledged questions about the path ahead.

“Stronger data and uncertainty over fiscal and trade policies mean rising risks that the Fed may opt to slow the pace of easing,” she said, noting that the central bank might start to “skip” rate cuts next year.

The decision by the Fed came the same day that the Bank of England warned that it could take longer for borrowing costs to fall, warning that inflation could creep higher after last week’s Budget.

“On both sides of the pond, we are seeing expectations for future rate cuts being scaled back considerably compared to what many had originally hoped for,” said Lindsay James, investment strategist at Quilter Investors.

“In the US, it seems interest rates will stay higher for longer as the Fed will need to tread very carefully until it is better able to assess the true impact of Trump’s plans.” (BBC New)