The Revolving Door Project (RDP), an anti-corruption watchdog group scrutinizing executive branch appointees to ensure they use their office to serve the broad public interest, accused Federal Reserve Chair Jerome Powell of “trying to get Donald Trump elected.”
Fed Chair Powell announced on Wednesday (July 31) that the Federal Open Market Committee (FOMC) is keeping the federal funds rate at 5.33% for the 12th consecutive month.
“The Fed’s refusal to provide interest rate relief at this juncture defies economic reason,” the RDP writes. “It makes no sense to postpone cuts.”
The watchdog argues that inflation has fallen to 2.5%. Excluding food, energy, and housing, inflation is at the Fed’s target of 2%. Notably, high interest rates can’t do anything to combat the price-gouging occurring in those heavily concentrated sectors, the RDP argues.
“The Fed has actually been exacerbating the [inflation] problem, because high rates are impeding housing construction and green energy investment, thus making shelter and power more expensive.”
Powell himself admitted during his semiannual testimony before Congress on July 9 that “this is no longer an overheated economy” and that “the labor market appears to be fully back in balance.”
In response to the FOMC’s decision, Revolving Door Project Executive Director Jeff Hauser released the following statement:
“That Powell’s Fed still refuses to lower interest rates—after Trump said that rates shouldn’t be lowered before the election—raises questions about the central bank’s independence. Whether the Fed keeps rates high or brings them down, one of two presidential candidates will benefit. While lower rates would provide much-needed economic relief to the American people, Powell has instead chosen to stick it to the people and give an electoral boost to Trump.”
Revolving Door Project Senior Researcher Kenny Stancil added:
“The FOMC’s decision to maintain high interest rates despite all evidence showing the need for an immediate cut doesn’t preserve the Fed’s independence or make Powell apolitical; it makes him [Powell] a shill for the Republican Party’s anti-worker, pro-Wall Street priorities.”
Yeah, this feels like a nothingburger. Rates have only started coming in line with expectations and corpo gouging is the real problem. No amount of high interest will stop companies charging extortionate rates. Powell has good reason to be cagey as every rate hike tanks the stock market because of the general panic. We finally have lenders and businesses getting the idea that the gravy train of nearly free loans is over.