Sure, he couched it in the painfully-sanitized Fedspeak one expects from the US central bank, but Federal Reserve Chair Jerome Powell just flashed President Trump – and stock market bulls – a big, bony middle finger.
Speaking Tuesday at a Council on Foreign Relations event in New York, Powell sprayed a burst of chemical disinfectant on the widely-held belief that the Fed had no choice but to slash interest rates in July.
“Since the beginning of the year, we had been taking a patient stance toward assessing the need for any policy change,” Powell said. “We’re looking at the overall situation and wanting to see more, frankly,” he added. “I think it’s important not to overreact in the short term to things that happen to be temporary or transient.”
While conceding that the Fed was still “grappling” with a potential rate cut, Powell remained firm in his conviction that the Fed should take a patient approach to policy shifts and disregard both transient storm clouds and political bluster.
Bluster like that of President Trump, who seemingly rails against the Fed every time the Dow drops more than half-a-point. Just yesterday, he unleashed a blistering tweet that compared Powell’s Fed to a “stubborn child.”
So it must have given Powell, standing just half an hour away from Wall Street, immense pleasure to flash Trump this patronizing middle finger.
“The Fed is insulated from short-term political pressures — what is often referred to as our ‘independence,’” Powell said. “Congress chose to insulate the Fed this way because it had seen the damage that often arises when policy bends to short-term political interests.”
Stocks, predictably, recoiled.
So much for that Fed capitulation Wall Street was banking on.