New York Federal Reserve President John Williams on Wednesday highlighted the importance of central bank independence as President Donald Trump seeks to control monetary policy.
In an interview with CNBC, influential policymakers declined to comment directly on Trump’s efforts to fire Federal Governor Lisa Cook, but noted the central bank’s important economic role in maintaining a stable economy.
“Personally, I work with Lisa Cook. She is a member of the Governor’s Committee and she has always brought integrity and commitment to the central bank’s mission,” Williams said in an interview with “Scokebox.” “I think the independence of the Federal Reserve central bank is very important… I know from history that independent central banks can provide low inflation, economic and economic stability.”
In the first year of his second term, Trump repeatedly pushed against the traditional barriers that stood between the quasi-fed government and influence from the White House and Capitol Hill.
The president has denounced Fed Chairman Jerome Powell and his fellow officials for not lowering interest rates. Previously, he made the idea of looting Powell a toy before finally deciding to play against Cook.
Williams said the fight must unfold in court.
“The structure of the Federal Reserve is like it’s designed to have independent policymakers making decisions. It’s designed to allow long-term decisions to have an impact on the economy, away from short-term political pressures,” he said. “I think that’s really, really important.”
As for the short-term direction of policy, Williams said the Fed is likely to lower the rate, but he did not provide a schedule at a time when it might happen. The market is hoping that the Federal Open Market Committee, which is Vice-Chaired by Williams and is a permanent voting member, will resume cutting benchmark rates in September after putting the year on hold. The current Fed fund ratio is between 4.25% and 4.50%.
Williams generally regards the US economy as strong if it slows down a little, calling the labor market “solid.”
“If things move in the way they want them to do in terms of our maximum employment and price stability goals, I think it would be appropriate to lower interest rates over time,” he said. “But we have to be driven by data.”
Powell said last Friday that he expected prices to drop, but did not specify a time slot.
