• Fed chair makes case for central bank independence, saying it is cornerstone of modern democracies, safeguard against politicization of monetary policy

ISTANBUL

US Federal Reserve Chair Jerome Powell said Wednesday that the central bank would consider reducing the policy rate after prices declined.

Powell said during a news conference after the Fed's policy decision that he expects to see “the effects of tariffs flowing through goods prices peaking and then starting to come down, assuming there are no new major tariff increases that are begun.”

“And that’s what we expect to see over the course of this year. If we see that, that would be something that tells us that we can we can loosen policy,” he added.

The Fed decided to keep the policy rate unchanged at the range between 3.5% -3.75%, saying that economic activity has been expanding at a "solid" pace.

Powel stated that the US economic growth outlook currently looks stronger compared to where things were last year.

“If you look at the incoming data since the last meeting, there is) clear improvement in the outlook for growth,” said Powell. “Inflation performed about as expected, and as I mentioned, some of the labor market data came in suggesting evidence of stabilization. So, it’s overall, a stronger forecast, really.”

“The US economy expanded at a solid pace last year and is coming into 2026 on a firm footing,” he said. “While job gains have remained low, the unemployment rate has shown some signs of stabilization and inflation remains somewhat elevated.”

It’s ‘not appropriate’ to comment on recent dollar volatility

When questioned about the recent volatility of the dollar, Powell said he does not comment on the currency.

“We don’t talk about the dollar. We don’t talk about what moves it around,” Powell said, adding that the Treasury Department, in particular, and the Trump administration are in charge of the currency.

Following President Donald Trump's dismissal of the decline, the US dollar index dropped to multiyear lows Tuesday. But it increased Wednesday after Treasury Secretary Scott Bessent disregarded the possibility of US currency market action.

Lisa Cook case ‘perhaps the most important’ in Fed history

Powell's choice to attend oral arguments this month in the case of Lisa Cook at the Supreme Court was viewed as an atypical move for a Fed head.

“I will tell you why I attended,” Powell said in response to a question. “I would say that that case is perhaps the most important legal case in the Fed’s 113-year history. And I, as I thought about it, I thought it might be hard to explain why I didn’t attend.”

Whether a sitting president can remove a Federal Reserve governor in the way that Trump has attempted is in question in the Cook case. Before Cook joined the board in 2021, the president accused her of committing mortgage fraud by claiming two separate houses as her primary residence. A president may only remove a board of governors member "for cause," according to the Federal Reserve Act.

Emphasis on central bank independence

Powell also made a case for central bank independence, stating that it is essential to modern democracies and serves as a barrier against the politicization of monetary policy.

“The point of independence is not to protect policymakers or anything like that. It just is that every advanced economy, democracy in the world has come around to this common practice. It’s just an institutional arrangement that has served the people well, and that is to have a separation between -- to not have direct elected official control over the setting of monetary policy,” he said.

His remarks follow Trump's growing outspokenness about management at the Fed. It has occurred as a result of his repeated criticism of Powell and his associates, his own nominations and his statements that he believes the president ought to be consulted when making decisions about interest rates.