November 7, 2024 • 14 mins
Less than two days after Donald Trump won a second term, the Federal Reserve announced a rate cut. But speaking to reporters, Fed’s Powell faced difficult questions about the path forward for interest rates — and for him — under Trump.
Bloomberg economic policy editor Kate Davidson joins host Saleha Mohsin to discuss how Powell’s answers today set up for a rematch between him and Trump over the Fed’s mission and independence.
Read more: Trump’s Victory Casts a Shadow Over the Federal Reserve
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Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:03):
Bloomberg Audio Studios, podcasts, radio news.
Speaker 2 (00:09):
Less than forty eight hours after the presidential election was
called for Donald Trump, Federal Reserve Chair Jerome Powell announced
the Central Bank's latest rate cut.
Speaker 3 (00:17):
At today's meeting, The committee decided to lower the target
range for the federal funds rate by a quarter percentage point.
Speaker 2 (00:23):
That was supposed to be the news of the day.
Stocks were up after all, even if most people watching
the Fed closely expected it, But the moment that raised
eyebrows had nothing to do with the rate cut. Multiple
reporters asked Powell about how he would respond to a
US president trying to replace him, something Trump had looked
into in his first term.
Speaker 1 (00:42):
Some of the president's elects advisors have suggested that you
should resign.
Speaker 3 (00:47):
If he asked you to leave, would you go?
Speaker 2 (00:49):
No?
Speaker 3 (00:50):
Do you think that legally you're not required to leave? No?
Speaker 1 (00:54):
Do you believe the president has a power to fire
or demote you? And it has the FED determined the
legal body of a president demoting at will any of
the other governors with leadership positions not.
Speaker 3 (01:05):
Permitted under the law. This was a pretty stunning moment.
Speaker 2 (01:09):
For months on the campaign trail and throughout his first presidency,
Trump has been critical of the FED, and he said
that he might try to influence the Central Bank's decision making.
Powell's answers today set up a rematch, a renewed power
struggle over the Fed's mission and independence between the world's
most influential central banker and the world's most powerful president
(01:30):
that will loom large in the coming months and possibly years. Today,
on the show How the Federal Reserve is gearing up
to navigate the tricky political road of a second Trump term,
I spoke with Kate Davidson, Bloomberg's managing editor for US
Economic Policy, about how the world's most powerful central bank
(01:52):
is expected to protect its independence with a president that
seems determined to pull it into the political fray. From
Bloomberg's Washington bureau. Is the Big Take DC podcast, I'm
Salamosen So, Kate, there was a standout moment in today's
press conference.
Speaker 3 (02:11):
What happened? Yeah, this was a pretty stunning moment. A
reporter asked Jay Powell about the idea that President elect
Trump could ask him to resign and what would he
do if he got that request? Would he step down?
And he answered with one very forceful word no. And
there was a follow up question and it was, you know, essentially,
do you think that legally you're not required to? And
(02:32):
he said again no, And that was that was basically
the the uh, you know, the end of that exchange.
It was pretty remarkable and I think that it was
laying down a clearer marker two days after the reelection
of the former president, who had sparred very openly with
j Powell in his first term, saying, you know, essentially,
I'm not going anywhere.
Speaker 2 (02:52):
So the reelection of Trump is going to put an
even bigger spotlight on the FED. Tell me why that is?
Speaker 3 (02:57):
Sure? So there's an elect Trump. In his first term
he was in the White House, he was not shy
about sharing his feelings about the FED and about his nominee.
He nominated Jay Powell and pretty soon after seemed to
maybe have some regrets.
Speaker 2 (03:12):
About that decision and called him a bonehead.
Speaker 3 (03:14):
He had a lot of spicy things to say about
the FED chair. I mean, he was very explicitly pushing
the FED to lower rates and then when they began
that process at the time, pushing them to go faster
and further. As president, he wanted a stronger economy. He
wanted a stronger growth, and he wanted the FED to
help him in that effort, and was frustrated that essentially,
(03:34):
the FED, I think would seem looking back, did what
they say that they usually do, which is ignore all
of it.
Speaker 2 (03:39):
So Trump actually explored whether he could fire or demote
Powell from his position as chair.
Speaker 3 (03:45):
Tell me how did the.
Speaker 2 (03:45):
FED respond to pressure from Trump during that first term.
I think it did raise a lot of questions, certainly
outside of the building, about how bothered are policymakers, how
bothered is Jay Powell by this?
Speaker 3 (03:56):
Right? Is the FED starting to get anxious and nervous
about this? I mean, they to play it very straight
and won't comment on this, but internally we know that
they looked into at least this question. I think at
the times Leah you had reported, a FED spokesperson at
the time said that there's not really it doesn't appear
to be any sort of legal justification for firing the
FED chair. So clearly FED lawyers were paying attention and
(04:18):
we're looking into this. But when it came down to
the policy decisions that the FED made, I think, apart
from maybe some small criticism about could they have gone
sooner or later. Just did they delay any decision making
because of this? I think broadly the view was no,
they didn't. They basically set it aside. J Powell kind
of stuck to the script, avoided questions about Trump, avoided
weighing in on the criticism of him, whether he would
(04:40):
leave early, whether he was worried about his job, any
of that, and just kept doing their jobs. I mean,
I will say one other thing behind the scenes, though,
is he definitely did work very hard to shore up
his relationships with members of Congress, and he had a
lot of support from Republicans and that time.
Speaker 2 (04:54):
Years later, I heard randomly that one of the former
FED chairs, either Ben Bernank or Alan greens Man, sent
by post a pair of earmuffs to J. Powell saying,
don't listen in These criticisms of the Fed were something
Trump kept up during his campaign this year. I've made
a lot of money.
Speaker 3 (05:11):
I was very successful, and I think I have a
better instinct than in many cases people that would be
on the Federal Reserve.
Speaker 2 (05:17):
Or the chairman. So what do you think he was
hoping to do by making these kinds of remarks while campaigning.
Speaker 3 (05:22):
I think it was essentially putting them unnoticed. When he
comes into office, he certainly once again will not hesitate
to share his views and his feelings about where interest
rates should be. He went even further to say, you know,
he thinks he should have a say on rates. He
thinks there's nothing wrong with that. He said, Hey, they
don't have to listen to me, but I should have
a right to say I know a lot about this.
I don't think I should be allowed to order it,
(05:44):
but I think I have the right to put in
comments as to whether or not interest rates should go
up or down. That might seem, I think, to an
average person, like a reasonable argument that you know, what's
so bad about the president saying where he thinks interest
rate should be. The issue is if we were to
look at other countries around the world when you see
and hear this kind of talk, this kind of over
political pressure, that it can seep into the decisions that
(06:08):
the policy makers are making. So for a very long time,
you know, Seleia, there had been a policy in the
White House, across administrations, across political parties to just not
go there.
Speaker 2 (06:17):
From the nineties up until Trump, right, just.
Speaker 3 (06:19):
Don't say anything at all about rates or about the
Central Bank to avoid the risks that there could be
for even perceived political pressure because markets pay attention to that.
Speaker 2 (06:28):
So we've talked about some of the ways that Trump
has sought to or talked about breaking tradition and moving
into the Fed's leane and politicizing the FED. But the
FED does have guard rails to protect it from political interference.
Can you tell me about some of those. Sure.
Speaker 3 (06:45):
So one of the key guard rails has to do
with appointments to the FED Board. So the President nominates
the officials that serve on the board, and they are
meant to serve fourteen year terms. The point is that
these positions don't coincide with presidential election cycles. In other words,
when a new president is elected, that's not an opportunity
(07:06):
for him to clean house at the FED. And when
it comes to the chair in particular, the terms are
basically meant to and at least a year after a
new president comes in, those terms are kind of staggered,
and that's by design. So those are probably the most
important guardrails. And then to be clear on that, the
president nominates those officials, but the Senate has to confirm them.
(07:26):
So otherwise the FED is an independent agency. I mean,
they don't need the White House to rubber stamp or
sign off on these rate decisions.
Speaker 2 (07:33):
So with those kinds of protections in place, could he
really try to push the Fed into setting interest rates
to suit his political agenda once he's picked his own
FED chair.
Speaker 3 (07:45):
I think that's the big question, right, I mean, if
the President were able to install and nominate and get
support for someone in that role who was willing to
listen to him, then yes he could. He could in theory,
influence what the FED does. Of course, the FED chair
is just one person, but that's a powerful position. I mean,
the chairman leads the committee, leads the FED Board, but
(08:05):
also there's a broader committee of decision makers includes the
presidents of the twelve regional FED banks, and the chair
of that committee that person is chosen by all of
those policymakers. So technically, say President Trump were to nominate
someone to become chairman of the FED Board in Washington,
had all the supportive Republicans and that person went in,
(08:25):
they would still need to be chosen as the chair
by all of their colleagues. So that's one potential check
on that, but it's a risk, and I think there
have been some questions about what would that look like.
When President elect Trump has said he wants to have
more say, how would that work. Would it be, you know,
calling up the day before a policy meeting and saying,
here's what I'd like you to do, and would the
(08:45):
person and the job listen? Which is tweeting right? I
mean that will be a very big question in the
Senate confirmation process for the next nominee to be FED chair.
Speaker 2 (08:56):
For all the Federal Reserves efforts to stay out of politics,
it's going to have to face the reality of Trump's
economic agenda coming up. How that could complicate the Fed's
efforts to tame inflation. What do we know about what
Trump wants from the Fed? He's unhappy, What does he
(09:18):
want monetary policy to deliver for him?
Speaker 3 (09:21):
This is a tricky question because obviously before the election,
he was complaining that the half point rate cut was
too big. But it was obviously political to use his words.
Everyone knows that was a political maneuver that they tried
to do before the election. I think, as we've seen
with this president that when he is in power, that
(09:42):
tends to shift his view and he's his opinion on
these things. Generally speaking, presidents tend to like lower rates.
So what will he do when he comes into office.
The FED is already lowering rates. They've started cutting them
from the very high levels where they'd been to fight
inflation for the past couple of years. So despite his
complaints about the half point cut, could he come in
and complain, Hey, you're not lowering them fast enough. You
(10:03):
need to go faster, and you need to go bigger.
I wouldn't be surprised to see that.
Speaker 2 (10:07):
And the reason presidents like low interest rates is because
it basically juices the economy.
Speaker 3 (10:11):
Yes, yes, to put a finer point on it, it's
just good for growth. Lower borrowing costs generally helped to
spur spending by consumers and investments by businesses. But the risk,
of course, is that when you have too much of that,
inflation can pick up. And that's you know, we hadn't
had a high bout of inflation in forty years, and
the FED is still grappling with the fallout from very
(10:33):
high inflation of the past few years. And so I
think that they are going to continue to be very
cautious about how they approach cuts, and that could lead
to some natural tension with the incoming president.
Speaker 2 (10:43):
The FED might operate independently from politics, but it will
have to factor in Trump's economic agenda as it sets
interest rates. How could some of those proposed policies affect
the federal reserves efforts to get inflation under control.
Speaker 3 (10:57):
Well, there's a lot that we know about what President
elect Trump has said he wants to do, but of
course the devils in the details. A lot will depend
on the outcoming Congress, but we have a pretty good
sense of at least the issues that he would prioritize.
He's been very clear that he would pursue higher tariffs,
although the amounts could vary right and could depend on
(11:19):
which countries he goes after. That is something that economists
se as inflationary. It's essentially a tax that's passed on
to consumers and by some estimates, could cost American households
thousands of dollars a year. That could put upward pressure
on prices, and that's inflation. That's the Fed's job to
be worried about that issue. So there's that Congress will
grapple next year with a very big domestic policy issue
(11:40):
that tax cuts and jobs Act, which was actually passed
during President Trump's first term and implemented in twenty eighteen.
That's set to expire large portions of that at the
end of twenty twenty five. So a big tax cut
could inject more stimulus into the economy. That's something that
the FED will have to consider. And this issue of
immigration or portation. You President Trump has said that he
(12:02):
would pursue a policy of deporting a number of migrants,
potentially very large number, and that could affect, you know,
the labor supply, it could have broader effects on the economy.
So all of those issues combined have sort of raised
the potential or the risk that the FED might have
to approach rate cuts a little more carefully, a little
more cautiously.
Speaker 2 (12:21):
How soon do you think that we'll see the impact
of Trump's presidency on the FED. It's a great question,
and I don't know what the answer is. I do
think that we expect that the President elect, as he
did in his first term, will have a lot to
say about the Fed's decisions. And I think that the
rest of the Republican Party other members could take a
(12:42):
similar sort of approach and really scrutinize what they are doing.
I think that the FED, even though they're very used
to ignoring political criticism, they do have to answer to
the public, and I think that it makes it more
important and perhaps a little trickier for them to explain
very clearly why they're doing what they're doing. You know,
when they are facing political blowback, as they potentially will
(13:05):
from the incoming president, they just have to be that
much more clear about, well, this is why we're doing
what we're doing. In other words, it's not for political reasons.
It's not to help somebody or hurt somebody. It's about
doing what's best for the economy. That is how they
will likely explain it. Thanks for listening to The Big
Take DC podcast from Bloomberg News. I'm Salia Mosen. This
(13:27):
episode was produced by Julia Press with support from David Fox.
It was edited by Caitlyn and Kenney. It was mixed
by Alex Sugia in fact checked by Adriana Tapia. Naomi Shaven,
who also edited this episode, is our senior producer. Wendy
Benjaminson and Elizabeth Ponso provide editorial direction. Nicole Beevester Bower
is our executive producer. Sage Bauman is Bloomberg's head of podcasts.
(13:50):
Please follow and review The Big Take DC wherever you
listen to podcasts. It helps new listeners find the show
Speaker 1 (14:00):
Lead.
Bloomberg Audio Studios, podcasts, radio news.
Speaker 2 (00:09):
Less than forty eight hours after the presidential election was
called for Donald Trump, Federal Reserve Chair Jerome Powell announced
the Central Bank's latest rate cut.
Speaker 3 (00:17):
At today's meeting, The committee decided to lower the target
range for the federal funds rate by a quarter percentage point.
Speaker 2 (00:23):
That was supposed to be the news of the day.
Stocks were up after all, even if most people watching
the Fed closely expected it, But the moment that raised
eyebrows had nothing to do with the rate cut. Multiple
reporters asked Powell about how he would respond to a
US president trying to replace him, something Trump had looked
into in his first term.
Speaker 1 (00:42):
Some of the president's elects advisors have suggested that you
should resign.
Speaker 3 (00:47):
If he asked you to leave, would you go?
Speaker 2 (00:49):
No?
Speaker 3 (00:50):
Do you think that legally you're not required to leave? No?
Speaker 1 (00:54):
Do you believe the president has a power to fire
or demote you? And it has the FED determined the
legal body of a president demoting at will any of
the other governors with leadership positions not.
Speaker 3 (01:05):
Permitted under the law. This was a pretty stunning moment.
Speaker 2 (01:09):
For months on the campaign trail and throughout his first presidency,
Trump has been critical of the FED, and he said
that he might try to influence the Central Bank's decision making.
Powell's answers today set up a rematch, a renewed power
struggle over the Fed's mission and independence between the world's
most influential central banker and the world's most powerful president
(01:30):
that will loom large in the coming months and possibly years. Today,
on the show How the Federal Reserve is gearing up
to navigate the tricky political road of a second Trump term,
I spoke with Kate Davidson, Bloomberg's managing editor for US
Economic Policy, about how the world's most powerful central bank
(01:52):
is expected to protect its independence with a president that
seems determined to pull it into the political fray. From
Bloomberg's Washington bureau. Is the Big Take DC podcast, I'm
Salamosen So, Kate, there was a standout moment in today's
press conference.
Speaker 3 (02:11):
What happened? Yeah, this was a pretty stunning moment. A
reporter asked Jay Powell about the idea that President elect
Trump could ask him to resign and what would he
do if he got that request? Would he step down?
And he answered with one very forceful word no. And
there was a follow up question and it was, you know, essentially,
do you think that legally you're not required to? And
(02:32):
he said again no, And that was that was basically
the the uh, you know, the end of that exchange.
It was pretty remarkable and I think that it was
laying down a clearer marker two days after the reelection
of the former president, who had sparred very openly with
j Powell in his first term, saying, you know, essentially,
I'm not going anywhere.
Speaker 2 (02:52):
So the reelection of Trump is going to put an
even bigger spotlight on the FED. Tell me why that is?
Speaker 3 (02:57):
Sure? So there's an elect Trump. In his first term
he was in the White House, he was not shy
about sharing his feelings about the FED and about his nominee.
He nominated Jay Powell and pretty soon after seemed to
maybe have some regrets.
Speaker 2 (03:12):
About that decision and called him a bonehead.
Speaker 3 (03:14):
He had a lot of spicy things to say about
the FED chair. I mean, he was very explicitly pushing
the FED to lower rates and then when they began
that process at the time, pushing them to go faster
and further. As president, he wanted a stronger economy. He
wanted a stronger growth, and he wanted the FED to
help him in that effort, and was frustrated that essentially,
(03:34):
the FED, I think would seem looking back, did what
they say that they usually do, which is ignore all
of it.
Speaker 2 (03:39):
So Trump actually explored whether he could fire or demote
Powell from his position as chair.
Speaker 3 (03:45):
Tell me how did the.
Speaker 2 (03:45):
FED respond to pressure from Trump during that first term.
I think it did raise a lot of questions, certainly
outside of the building, about how bothered are policymakers, how
bothered is Jay Powell by this?
Speaker 3 (03:56):
Right? Is the FED starting to get anxious and nervous
about this? I mean, they to play it very straight
and won't comment on this, but internally we know that
they looked into at least this question. I think at
the times Leah you had reported, a FED spokesperson at
the time said that there's not really it doesn't appear
to be any sort of legal justification for firing the
FED chair. So clearly FED lawyers were paying attention and
(04:18):
we're looking into this. But when it came down to
the policy decisions that the FED made, I think, apart
from maybe some small criticism about could they have gone
sooner or later. Just did they delay any decision making
because of this? I think broadly the view was no,
they didn't. They basically set it aside. J Powell kind
of stuck to the script, avoided questions about Trump, avoided
weighing in on the criticism of him, whether he would
(04:40):
leave early, whether he was worried about his job, any
of that, and just kept doing their jobs. I mean,
I will say one other thing behind the scenes, though,
is he definitely did work very hard to shore up
his relationships with members of Congress, and he had a
lot of support from Republicans and that time.
Speaker 2 (04:54):
Years later, I heard randomly that one of the former
FED chairs, either Ben Bernank or Alan greens Man, sent
by post a pair of earmuffs to J. Powell saying,
don't listen in These criticisms of the Fed were something
Trump kept up during his campaign this year. I've made
a lot of money.
Speaker 3 (05:11):
I was very successful, and I think I have a
better instinct than in many cases people that would be
on the Federal Reserve.
Speaker 2 (05:17):
Or the chairman. So what do you think he was
hoping to do by making these kinds of remarks while campaigning.
Speaker 3 (05:22):
I think it was essentially putting them unnoticed. When he
comes into office, he certainly once again will not hesitate
to share his views and his feelings about where interest
rates should be. He went even further to say, you know,
he thinks he should have a say on rates. He
thinks there's nothing wrong with that. He said, Hey, they
don't have to listen to me, but I should have
a right to say I know a lot about this.
I don't think I should be allowed to order it,
(05:44):
but I think I have the right to put in
comments as to whether or not interest rates should go
up or down. That might seem, I think, to an
average person, like a reasonable argument that you know, what's
so bad about the president saying where he thinks interest
rate should be. The issue is if we were to
look at other countries around the world when you see
and hear this kind of talk, this kind of over
political pressure, that it can seep into the decisions that
(06:08):
the policy makers are making. So for a very long time,
you know, Seleia, there had been a policy in the
White House, across administrations, across political parties to just not
go there.
Speaker 2 (06:17):
From the nineties up until Trump, right, just.
Speaker 3 (06:19):
Don't say anything at all about rates or about the
Central Bank to avoid the risks that there could be
for even perceived political pressure because markets pay attention to that.
Speaker 2 (06:28):
So we've talked about some of the ways that Trump
has sought to or talked about breaking tradition and moving
into the Fed's leane and politicizing the FED. But the
FED does have guard rails to protect it from political interference.
Can you tell me about some of those. Sure.
Speaker 3 (06:45):
So one of the key guard rails has to do
with appointments to the FED Board. So the President nominates
the officials that serve on the board, and they are
meant to serve fourteen year terms. The point is that
these positions don't coincide with presidential election cycles. In other words,
when a new president is elected, that's not an opportunity
(07:06):
for him to clean house at the FED. And when
it comes to the chair in particular, the terms are
basically meant to and at least a year after a
new president comes in, those terms are kind of staggered,
and that's by design. So those are probably the most
important guardrails. And then to be clear on that, the
president nominates those officials, but the Senate has to confirm them.
(07:26):
So otherwise the FED is an independent agency. I mean,
they don't need the White House to rubber stamp or
sign off on these rate decisions.
Speaker 2 (07:33):
So with those kinds of protections in place, could he
really try to push the Fed into setting interest rates
to suit his political agenda once he's picked his own
FED chair.
Speaker 3 (07:45):
I think that's the big question, right, I mean, if
the President were able to install and nominate and get
support for someone in that role who was willing to
listen to him, then yes he could. He could in theory,
influence what the FED does. Of course, the FED chair
is just one person, but that's a powerful position. I mean,
the chairman leads the committee, leads the FED Board, but
(08:05):
also there's a broader committee of decision makers includes the
presidents of the twelve regional FED banks, and the chair
of that committee that person is chosen by all of
those policymakers. So technically, say President Trump were to nominate
someone to become chairman of the FED Board in Washington,
had all the supportive Republicans and that person went in,
(08:25):
they would still need to be chosen as the chair
by all of their colleagues. So that's one potential check
on that, but it's a risk, and I think there
have been some questions about what would that look like.
When President elect Trump has said he wants to have
more say, how would that work. Would it be, you know,
calling up the day before a policy meeting and saying,
here's what I'd like you to do, and would the
(08:45):
person and the job listen? Which is tweeting right? I
mean that will be a very big question in the
Senate confirmation process for the next nominee to be FED chair.
Speaker 2 (08:56):
For all the Federal Reserves efforts to stay out of politics,
it's going to have to face the reality of Trump's
economic agenda coming up. How that could complicate the Fed's
efforts to tame inflation. What do we know about what
Trump wants from the Fed? He's unhappy, What does he
(09:18):
want monetary policy to deliver for him?
Speaker 3 (09:21):
This is a tricky question because obviously before the election,
he was complaining that the half point rate cut was
too big. But it was obviously political to use his words.
Everyone knows that was a political maneuver that they tried
to do before the election. I think, as we've seen
with this president that when he is in power, that
(09:42):
tends to shift his view and he's his opinion on
these things. Generally speaking, presidents tend to like lower rates.
So what will he do when he comes into office.
The FED is already lowering rates. They've started cutting them
from the very high levels where they'd been to fight
inflation for the past couple of years. So despite his
complaints about the half point cut, could he come in
and complain, Hey, you're not lowering them fast enough. You
(10:03):
need to go faster, and you need to go bigger.
I wouldn't be surprised to see that.
Speaker 2 (10:07):
And the reason presidents like low interest rates is because
it basically juices the economy.
Speaker 3 (10:11):
Yes, yes, to put a finer point on it, it's
just good for growth. Lower borrowing costs generally helped to
spur spending by consumers and investments by businesses. But the risk,
of course, is that when you have too much of that,
inflation can pick up. And that's you know, we hadn't
had a high bout of inflation in forty years, and
the FED is still grappling with the fallout from very
(10:33):
high inflation of the past few years. And so I
think that they are going to continue to be very
cautious about how they approach cuts, and that could lead
to some natural tension with the incoming president.
Speaker 2 (10:43):
The FED might operate independently from politics, but it will
have to factor in Trump's economic agenda as it sets
interest rates. How could some of those proposed policies affect
the federal reserves efforts to get inflation under control.
Speaker 3 (10:57):
Well, there's a lot that we know about what President
elect Trump has said he wants to do, but of
course the devils in the details. A lot will depend
on the outcoming Congress, but we have a pretty good
sense of at least the issues that he would prioritize.
He's been very clear that he would pursue higher tariffs,
although the amounts could vary right and could depend on
(11:19):
which countries he goes after. That is something that economists
se as inflationary. It's essentially a tax that's passed on
to consumers and by some estimates, could cost American households
thousands of dollars a year. That could put upward pressure
on prices, and that's inflation. That's the Fed's job to
be worried about that issue. So there's that Congress will
grapple next year with a very big domestic policy issue
(11:40):
that tax cuts and jobs Act, which was actually passed
during President Trump's first term and implemented in twenty eighteen.
That's set to expire large portions of that at the
end of twenty twenty five. So a big tax cut
could inject more stimulus into the economy. That's something that
the FED will have to consider. And this issue of
immigration or portation. You President Trump has said that he
(12:02):
would pursue a policy of deporting a number of migrants,
potentially very large number, and that could affect, you know,
the labor supply, it could have broader effects on the economy.
So all of those issues combined have sort of raised
the potential or the risk that the FED might have
to approach rate cuts a little more carefully, a little
more cautiously.
Speaker 2 (12:21):
How soon do you think that we'll see the impact
of Trump's presidency on the FED. It's a great question,
and I don't know what the answer is. I do
think that we expect that the President elect, as he
did in his first term, will have a lot to
say about the Fed's decisions. And I think that the
rest of the Republican Party other members could take a
(12:42):
similar sort of approach and really scrutinize what they are doing.
I think that the FED, even though they're very used
to ignoring political criticism, they do have to answer to
the public, and I think that it makes it more
important and perhaps a little trickier for them to explain
very clearly why they're doing what they're doing. You know,
when they are facing political blowback, as they potentially will
(13:05):
from the incoming president, they just have to be that
much more clear about, well, this is why we're doing
what we're doing. In other words, it's not for political reasons.
It's not to help somebody or hurt somebody. It's about
doing what's best for the economy. That is how they
will likely explain it. Thanks for listening to The Big
Take DC podcast from Bloomberg News. I'm Salia Mosen. This
(13:27):
episode was produced by Julia Press with support from David Fox.
It was edited by Caitlyn and Kenney. It was mixed
by Alex Sugia in fact checked by Adriana Tapia. Naomi Shaven,
who also edited this episode, is our senior producer. Wendy
Benjaminson and Elizabeth Ponso provide editorial direction. Nicole Beevester Bower
is our executive producer. Sage Bauman is Bloomberg's head of podcasts.
(13:50):
Please follow and review The Big Take DC wherever you
listen to podcasts. It helps new listeners find the show
Speaker 1 (14:00):
Lead.
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