Jerome Powell made it clear Wednesday that he is ready for the inevitable political blowback if the Federal Reserve does in fact cut rates at its September meeting, just seven weeks before Election Day.
When asked at a press conference if the Fed could, in fact, remain apolitical in taking such an action, he said, "I absolutely do."
"Anything that we do before, during, or after the election will be based on the data, the outlook, and the balance of risks, and not on anything else," he added.
The collision of Fed monetary policy and a red-hot election season is now officially in play after Powell signaled the Fed could cut rates at its next meeting on Sept. 17-18 as long as inflation continues to cool.
"We think the time is approaching," Powell said in response to a question from Yahoo Finance.
When asked if there was a growing sense of confidence on the Fed's Federal Open Market Committee that a cut could be made in September, he added, "Yes," as long as the data supported such an outcome.
A September rate cut could cause the central bank to face political criticism from both sides of the aisle in Washington.
Lawmakers from both parties have signaled they would criticize the Fed if a decision made at the last meeting before Election Day didn't go their way.
If Powell and his colleagues choose to keep rates at a 23-year high, a growing chorus of Democratic critics calling for cuts may reach a crescendo.
But if policymakers do indeed cut, Republicans from Donald Trump on down will be sure to cast the move as caving to election year pressure.
In an interview with Bloomberg published earlier this month, the Republican nominee and former president again reiterated that central bank officials should not ease monetary policy before the November election.
"It’s something that they know they shouldn’t be doing," Trump said.
Powell’s response to this mounting wave of political pressure has been to echo an independent, apolitical approach he has honed throughout 2024, emphasizing that the only criteria that he considers will be data on prices and jobs.
He came back to that theme on Wednesday, saying “this is my fourth presidential election at the Fed" and "we never use our tools to support or oppose a political party, a politician, or any political outcome."
In May he even offered a challenge to reporters: "You can go back and read the transcripts," he said. "See if anybody mentions, in any way, the pending election."
What Yahoo Finance found after reviewing years of FOMC meeting transcripts was — as Powell promised — few overt mentions of coming elections and no debate on the political merits of any one candidate over another.
But political topics still came up repeatedly as Fed officials wrestled with decisions that affected the US economy.
In just one example, Minneapolis Fed president Neel Kashkari took time in a January 2018 meeting to highlight these pressures as then-Chair Janet Yellen was set to depart and Powell was preparing to take his current seat at the head of the table.
"We work very hard, all of us, to be nonpolitical and nonpartisan, and yet we exist in a partisan, political world," Kashkari said in the transcript of that gathering. He praised Yellen, saying she had effectively "navigated that tension."
Throughout the seven meetings that Powell went on to chair in 2018, as one example, the term "political" was uttered 40 times, according to a search of the transcripts.
It came up as committee members discussed everything from then-President Trump's trade policy to developments in Europe to the economic effects of "political tensions in the United States" around that election year.
The publicly available transcripts cover Powell's tenure from 2012, when he became a Fed governor, to his first year as chair in 2018. Transcripts are released on a five-year delay, so recent meetings are not yet publicly available.
This year, there is just one Fed meeting left until voters go to the polls to select their next president.
The Fed's November gathering is scheduled to kick off on the morning of Nov. 6, just hours after the election voting sites close.
"The bottom line is, if we do our very best to do our part, and we stick to our part, that will benefit all Americans. If we get it right, the economy will be stronger," Powell said Wednesday as he defended the Fed's approach.
"We'll have price stability. People will find jobs, wages will rise in real terms, everyone will benefit. So that's what we believe and that's how we will always act."
Former St. Louis Fed president Jim Bullard downplayed the impact of a Fed cut on the November election.
In D.C., "somebody is going to be mad at you all the time," but "I would dispute the idea that anybody ever won an election based on 25 basis points at the September meeting," he told Yahoo Finance Thursday.
"The notion that this has some kind of big impact on the election is kind of hyperbole, I think."
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