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El presidente de la Reserva Federal de Estados Unidos, Jerome Powell, durante su rueda de prensa de este miércoles.

 

The saying goes that two don't fight if one doesn't want to. But if the one who wants to fight is Donald Trump, trouble is guaranteed. After Federal Reserve Chairman Jerome Powell diplomatically avoided responding to the President's disparaging words last week and turned a deaf ear to his pressure to continue lowering rates, Trump lashed out at him through Truth, his social network.

During the campaign, Trump continually blamed the previous president, Joe Biden, for the episode of high inflation experienced by the United States in recent years. It was a global phenomenon related to the exit from the pandemic, bottlenecks in the supply chain, strong monetary and fiscal stimulus to deal with the crisis and the rise in energy prices with the war in Ukraine. With Biden removed from the equation, the president sets his sights on Jerome Powell, with whom he already clashed in his first term. “Because Jay Powell and the Federal Reserve failed to stop the problem they created with inflation, I will do so by freeing up American energy production, dramatically reducing regulation, rebalancing international trade, and reviving American manufacturing, but I will do much more than stop inflation, I will make our Country powerful again financially and in other ways!” Trump wrote on his social network shortly after the press conference in which Powell explained that the central bank had decided to pause rate cuts.

“If the Fed had spent less time on DEI [diversity, equality, and inclusion], gender ideology, ‘green’ energy, and fake climate change, inflation would never have been a problem. Instead, we suffered the worst inflation in the history of our country!” the president lied in his message. Inflation in recent years peaked at 9.1% in June 2022. While that rate is the highest in the past four decades, it is a far cry from the 14.8% in 1980 or the levels above 10% in 1974 and 1979, not to mention the rates of around 20% at certain times in the 1940s, 1950s and 1960s.

Trump's theses are also somewhat contradictory. If he is so concerned about inflation, he should not ask the Fed to cut rates "immediately," since a less restrictive monetary policy would contribute to price increases. The president recently called for such cuts and also referred to Powell and members of the Federal Reserve in a disparaging manner last Thursday from the Oval Office of the White House. “I think I know interest rates much better than they do, and I think I certainly know them much better than the main person in charge of making that decision,” he said.

During his campaign, he also attacked Powell, whom he accused at the time of wanting to lower rates not because of the state of the economy, but to help Democrats win the elections, in open contradiction with his current position. He also ridiculed his role, such as when he said last October in Chicago about the position of Federal Reserve chairman: “It is the best job in government. You show up at the office once a month and say: ‘We are going to flip a coin. ’ And everyone talks about you as if you were a God.”

At his press conference, Powell refused to comment on Trump’s statements in which he asked for rates to be lowered “immediately.” “I am not going to respond or comment at all on what the president has said. It is not appropriate for me to do so. But the public must trust that we will continue to do our job as we always have, focusing on using our tools to achieve our goals and really staying calm and doing our job, and that is how we best serve the public,” the Federal Reserve chairman said at his press conference.

He was also asked about Trump’s magic recipe for lowering inflation by unleashing energy production, which the oil companies themselves view with some skepticism. Powell declined to answer, saying that he was not going to “react or discuss anything that any elected politician might say.”

After three consecutive rate cuts, the Fed decided to keep the price of money in the range of 4.25%-4.50% at its meeting on Wednesday. Powell also stressed the message that there is no rush to resume the cuts, partly due to the uncertainty and lack of definition of the economic measures to be adopted by Trump.

In his message in Truth, Trump also criticizes the role of supervisor and regulator of the central bank. “The Federal Reserve has done a terrible job regulating banks. Treasury will lead the effort to cut unnecessary regulation, and unleash lending for all Americans and businesses,” Trump wrote.

Vice Chairman of Oversight Michael Barr recently resigned

Link: https://elpais.com/economia/2025-01-29/trump-arremete-contra-la-reserva-federal-tras-su-pausa-en-la-rebaja-de-tipos.html#?rel=mas

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