Consider This from NPR Episode: Maintaining Stability is Key to the Economy. That's Getting Harder. Release Date: April 22, 2025

In this episode of NPR's Consider This, hosts delve into the increasing challenges faced by the Federal Reserve in maintaining economic stability amid political pressures and policy uncertainties. The discussion centers around Federal Reserve Chair Jerome Powell's efforts to combat inflation, the impact of President Donald Trump's trade policies, and the broader implications for the U.S. and global economy.

1. The Federal Reserve’s Mandate and Independence

The episode opens with a reflection on the Federal Reserve's core mission to stabilize the economy and mitigate downturns. Ari Shapiro sets the stage by referencing Janet Yellen's 2017 emphasis on financial education and the importance of the Federal Reserve's role:

Ari Shapiro [00:00]: "Back in January of 2017, when Janet Yellen was chair of the Federal Reserve, she spoke to a group of economics teachers in a national town hall meeting."

Scott Horsley reinforces this by highlighting the Fed's responsibilities:

Scott Horsley [00:33]: "Stabilizing the economy and mitigating a downturn, of course, also happened to be among the Federal Reserve's primary responsibilities."

The discussion underscores the Fed's commitment to independence from political influence, a principle Jerome Powell reiterated during his speech to the Economic Club of Chicago.

2. Jerome Powell Under Political Scrutiny

Jerome Powell's dedication to the Fed's independence is a focal point. Powell stated:

Scott Horsley [01:02]: "We're never going to be influenced by any political pressure. People can say whatever they want. That's fine, that's not a problem. But we will do what we do strictly without consideration of political or any other extraneous factors."

Despite this, Powell faced direct criticism from President Trump, who accused him of being ineffective:

Donald Trump [01:51]: "I don't think he's doing the job. He's too late, always too late, slow."
Donald Trump [01:57]: "I let him know it, and if I want him out, he'll be out of there real fast, believe me."

Trump's attacks intensified after Powell linked the administration's tariffs to economic downturns, predicting higher inflation and slower growth.

3. Impact of Tariffs on the Economy

The imposition of tariffs by President Trump has significant repercussions. Powell assessed that the tariffs would adversely affect the economy:

Scott Horsley [01:26]: "The level of tariff increases announced so far is significantly larger than anticipated, and the same is likely to be true of the economic effects, which will include higher inflation and slower growth."

These tariffs disrupt global trade dynamics, leading to increased prices for consumers and strained international relations. The International Monetary Fund (IMF) supports Powell's stance, forecasting a "big hit to global trade and slower economic growth."

4. IMF’s Support and Economic Outlook

The IMF's chief economist, Pierre Olivier Garrincha, echoed concerns about the administration's tariff strategy:

Scott Horsley [05:13]: "Beyond the abrupt increase in tariffs, the surge in policy uncertainty is a major driver of the economic outlook."

Garrincha criticized the haphazard implementation of tariffs, which exacerbates economic drag and uncertainty. The IMF warns of a potential "combination of slow growth and stubborn inflation," posing a unique challenge for the Federal Reserve, which traditionally addresses these issues with opposing strategies—cutting rates for slow growth and raising them to combat inflation.

5. Political Tensions and Potential Consequences

The tension between the Federal Reserve and the Trump administration has significant implications. Trump's public denouncement of Powell as a "major loser," coupled with suggestions of his potential removal, threatens the Fed's stability:

Scott Horsley [06:29]: "I think that would be devastating if he's not able to remain in place until his term is over. I think that would be highly counterproductive and lead to more turmoil in financial markets and ultimately a much weaker economy."

Senator John Kennedy, a Republican on the Banking Committee, weighed in, asserting that the president lacks the authority to remove the Fed chair:

Donald Trump [07:58]: "The Fed was designed to be insulated from political pressure so it can do the unpopular thing when necessary, that is, keep interest rates high to bring inflation under control."

This move against Powell not only undermines the Fed’s authority but also risks instigating market instability.

6. Market Reactions and Future Outlook

The conflict culminated in a significant market response when Trump’s attacks led to a stock market sell-off:

Scott Horsley [06:43]: "Investors in general have been hostile to the president's trade war, and they really don't like it when Trump tries to monkey with the Federal Reserve."

However, the market showed resilience as it rebounded following signals of potential de-escalation in the trade war:

Ari Shapiro [08:21]: "After the big sell off yesterday, the stock market rebounded today. Is that a vote of confidence in Powell?"

Treasury Secretary Scott Besant indicated expectations for trade de-escalation, which was positively received by investors, leading the Dow Jones Industrial Average to surge by over 1,000 points (2⅔ percent).

7. Conclusion: The Road Ahead

The episode concludes with reflections on the precarious balance the Federal Reserve must maintain in navigating inflation and growth amid political and economic turbulence. Ari Shapiro encapsulates the situation:

Ari Shapiro [02:55]: "Federal Reserve Chair Jerome Powell has been fighting inflation for years, and often it seems like there's a curveball just as things are getting better."

The ongoing trade tensions and political pressures present a formidable challenge to economic stability, underscoring the critical role of the Federal Reserve in safeguarding the economy's future.

Notable Quotes:

• Jerome Powell: "We're never going to be influenced by any political pressure... we will do what we do strictly without consideration of political or any other extraneous factors." [01:02]

• Donald Trump: "I don't think he's doing the job. He's too late, always too late, slow." [01:51]

• Scott Horsley on IMF's stance: "Beyond the abrupt increase in tariffs, the surge in policy uncertainty is a major driver of the economic outlook." [05:13]

• Senator John Kennedy: "I don't think Trump or any president has the authority to remove the Federal Reserve chairman." [07:58]

Produced by: Michael Levitt
Audio Engineering: Jimmy Keeley
Edited by: Courtney Dorning and Rafael Nam
Executive Producer: Sami Yenigun