"Federal Reserve Megaphone": Federal Reserve independence is challenged again, and no interest rate cut is expected this month
PANews reported on July 12 that according to Jinshi, the dispute over the building renovation has emboldened a faction within the Trump administration that has long wanted to challenge the independence of the Federal Reserve. Some economic advisers, such as Treasury Secretary Bessant, generally advocate maintaining the independence of the Federal Reserve. For example, Bessant refused to criticize Trump for the building renovation in a recent Fox Business interview. But other advisers and external allies have been exploring legal ways to remove Powell from his position since before the election. "No one is willing to make major renovations to a historic building during their term, let alone two historic buildings that need extensive repairs," Powell said in his testimony last month.
The move follows a broader push by Trump to lower interest rates to make it cheaper for the government to borrow. The Fed is not expected to cut rates at its meeting later this month, but Powell has signaled a rate cut could come later this year if inflation performs well or the labor market softens. Trump wants to reduce the debt-servicing costs of the federal deficit, which his tax cuts are likely to expand. But outside of extreme situations such as war, central banks in advanced economies resist such pressure. They see stable inflation as essential to maintaining confidence in their currencies.
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