Powell: Government Interest Costs Not Considered in Monetary Policy Decisions

According to Jinse Finance, Federal Reserve Chairman Jerome Powell stated on Wednesday that the Fed does not take government financing needs into account when formulating interest rate policy. At the press conference following the FOMC meeting, Powell emphasized that the Fed’s mission, as mandated by Congress, is to control inflation while maintaining a strong labor market to the greatest extent possible. He noted that given this statutory responsibility, "we do not consider the fiscal needs of the federal government. No central bank in a developed economy would do so," and such an approach would undermine the Fed’s credibility. Last year, the U.S. government’s interest expenses reached $1.1 trillion, with the cost of managing government debt more than doubling compared to pre-pandemic levels—largely due to the Fed maintaining high interest rates to curb inflation. Trump once claimed that a 3% rate cut would save the U.S. $1 trillion annually.