Name: U.S. Federal Reserve: Central bank under pressure over interest rates
Uploaded: 2025-12-10T00:50:46.515Z
Duration: 2 min 44 s
Description: U.S. central bank weighs rate decisions under political pressure—Economists warn cutting rates could fuel inflation.

U.S. central bank weighs rate decisions under political pressure—Economists warn cutting rates could fuel inflation.

Washington

The U.S. Federal Reserve is under heightened political scrutiny as President Donald Trump seeks to remove Jerome Powell from his position as Chair before the end of his term. Trump has criticized Powell for delaying interest rate cuts and for the high costs associated with renovating Federal Reserve buildings. 

Despite Trump's push, Powell has stated that he cannot be legally dismissed and intends to complete his term. Analysts note that even if Trump replaces Powell with National Economic Council Chair Kevin Hassett, policy changes are not guaranteed, as the Fed's policy-setting board includes 11 other voting members. The situation has sparked debate over the central bank's independence and its dual mandate to control inflation and support job growth.

U.S. Federal Reserve: Central bank under pressure over interest rates

As the U.S. Federal Reserve holds its last meeting of 2025, there's one looming question. Who's in charge now of monetary policy? U.S. President Donald Trump appointed Jerome Powell to lead the Fed back in 2017, but Trump now wants Powell gone before his second term ends in May. That's because the Fed didn't cut interest rates until September, eight months into Trump's administration. It's all because of the Fed. He's done a bad job. He's building a building. He's at $2.9 billion. It's actually 3.1 if you include other areas that are essentially the same thing. The moment led to a tense exchange between the president and Powell over the cost of renovating the Federal Reserve buildings. You're including the Martin renovation. You just added in a third building is what that is. It's a building that's being built. It was built five years ago. It's too late. Way too late. Powell has said Trump legally cannot fire him and that he will complete his term. I guess a potential Fed chair is here too. I don't know. Are we allowed to say that? Trump has hinted that he could replace Powell with this man, National Economic Council Chair Kevin Hassett, who supports Trump's call to cut interest rates. But observers say getting rid of Powell doesn't mean Trump will get his way. There are 11 other voting members in the policy-setting board at the Federal Reserve, and it's not a foregone conclusion that a Fed chair who wants to lower rates is going to be able to convince the other 11. Trump and Hassett say cutting interest rates will help more people buy homes as well as encourage consumer spending. Investors reportedly have warned the White House that Hassett's appointment could trigger a new period of high inflation. Others aren't so certain. I think the U.S. economy can stand 2.5% core inflation, to be honest with you, and do just fine. Right now, inflation is still at about 3%, and consumers tell economic surveys they're spending more on everything from groceries to gasoline and heating oil to entertainment. Another worry, companies aren't hiring as many workers, putting pressure on the Fed to both keep inflation down and boost job growth. Some ask whether it's time to end the dual mandate, giving the Federal Reserve more flexibility to respond to high unemployment or high prices. But that means changing the law, and it's not clear how that can happen without the Fed's losing its traditional freedom from political interference. Rosalind Jordan, Al Jazeera, Washington.

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