The Federal Reserve’s Tricky Economic and Political Terrain, Explained
Today on the Big Take DC podcast, host Saleha Mohsin unravels the Fed’s tricky role in managing the economy and staying out of the political fray.
The Marriner S. Eccles Federal Reserve building in Washington, DC.
Photographer: Stefani Reynolds/BloombergListen to the Big Take DC podcast on iHeart , Apple Podcasts , Spotify and the Bloomberg Terminal.
Federal Reserve Chair Jerome Powell is trying to navigate a tricky economy: stubborn inflation and persistent fears of a recession. Now, two men hoping for a second term in the White House are drawing the central bank into the political fray.
“We can expect that things are going to get a little spicy,” Kate Davidson, who covers the Fed, says on the Big Take DC podcast. Powell kicked-off 2024 with the expectation that he can successfully tame inflation without inflicting damage on other parts of the economy – the elusive “soft landing.” But within months, the presidential election cycle has the Fed stumping for its independence.
First, it was Donald Trump on the campaign trail talking about how he wouldn’t reappoint Powell as Fed chair if he makes it back to the White House. More recently, President Joe Biden raised eyebrows with a prediction that the Fed would cut interest rates, a move that would ultimately juice the economy just as voters decide who they want in the White House.
“The Fed and Jay Powell will always say – and they emphasize over and over and over again – that the election and politics of these decisions are just not a factor,” Davidson says.