Powell Flatly Rejects Suggestion Fed Plays Politics With Policy

(Bloomberg) -- Terms of Trade is a daily newsletter that untangles a world embroiled in trade wars. Sign up here. 

Federal Reserve Chairman Jerome Powell said political factors “play absolutely no role” at the U.S. central bank, rejecting a suggestion by a former Fed insider that it not cut interest rates to avoid enabling President Donald Trump’s trade war.

“We serve all Americans regardless of their political party,” he said Friday in Zurich. “The idea that we would deviate from that is just simply wrong.”

Former New York Fed President Bill Dudley sparked swift criticism after writing a Bloomberg Opinion column on Aug. 27 suggesting that the Fed reject interest-rate cuts that would help Trump’s prospects for re-election in 2020.

Dudley argued the central bank would risk enabling further escalation by the president in the trade war with China and said that officials should state explicitly that they “won’t bail out an administration that keeps making bad choices on trade policy.”

White House economic adviser Larry Kudlow slammed Dudley earlier on Friday, claiming he was politicizing the independent Fed and had gone “over the cliff” with his article.

--With assistance from Josh Wingrove.

To contact the reporters on this story: Fergal O'Brien in Zurich at fobrien@bloomberg.net;Jan Dahinten in Zurich at jdahinten@bloomberg.net

To contact the editors responsible for this story: Margaret Collins at mcollins45@bloomberg.net, Alister Bull

©2019 Bloomberg L.P.