“Because monetary policy affects everyone, I want to start with a plain-English summary of how the economy is doing, what my colleagues and I at the Federal Reserve are trying to do, and why,” Fed Chair Jay Powell said in June. | Jacquelyn Martin/AP Photo How the Fed’s Powell prepared for Trump’s criticism

Federal Reserve Chairman Jerome Powell has been preparing for this moment.

Since taking the helm of the central bank in February, Powell has downplayed the risk that President Donald Trump would try to influence the direction of Fed policy. “No one in the administration has said anything to me that really gives me concern on this front,” he declared on “Marketplace” radio last week.


But at the same time, Powell, a Trump appointee, has worked for months to shore up goodwill and support for the Fed. He held more than two dozen meetings with lawmakers from February to May, steered clear of commenting on issues outside the Fed’s jurisdiction and repeatedly made the case for the central bank’s political independence.

The moment that Powell had to have known was coming finally arrived on Thursday. “I don’t like all of this work that we’re putting into the economy and then I see rates going up,” Trump told CNBC. “I’m not thrilled.” That was followed by a couple of sharp tweets the next morning.

Powell did not put out a statement in response, letting his words from the interview last week stand on the question of Fed independence.

“We have a long tradition here of conducting policy in a particular way, and that way is independent of all political concerns,” the Fed chief told “Marketplace.” “We do our work in a strictly nonpolitical way, based on detailed analysis. … We don’t take political considerations into account.”

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“I’m deeply committed to that approach,” he added. “And so are all of my colleagues here.”

The Fed already faces a delicate balancing act in supporting sustained economic growth without stoking inflation, as the near-record-long expansion continues. Now that the president has openly criticized the Fed, every action it takes might be viewed through the lens of a reaction to him.

“If the decision is to slow [the pace of rate hikes], I would expect Trump to crow and call it a triumph, and that will be devastating for the Fed’s reputation,” said Peter Conti-Brown, a professor at the Wharton School of the University of Pennsylvania.

And if the central bank raises rates again, as it has projected it will do twice more this year, “I fear this will now be set up as the Fed defying Trump,” he added.

But experts suggested Powell’s political savvy might help him navigate headwinds from the White House, particularly by heading off criticism from the more powerful threat to the Fed: Congress, which can do whatever it wants to the central bank through legislation, and public opinion.

He has already got a head start; in a Senate that can agree on few things, Powell — a Republican originally nominated to the Fed board by former President Barack Obama — received 84 “yes” votes for his chairmanship earlier this year.

“Jay Powell’s professional identity has been in politics and in the private sector, and this caused a lot of people to pause on his candidacy to be Fed chair,” Conti-Brown said. “But Powell might have a skill set that is uniquely able to build political coalitions on a front like this.”

In recent decades, presidents have tended to avoid commenting on Fed actions — a policy formalized under former President Bill Clinton — under the assumption that short-term politics cloud the central bank’s ability to act in the long-term interest of the economy.

Strong advocates of Fed independence point to a previous Fed chairman, Arthur Burns, who was pressured by President Richard Nixon in the lead-up to the 1972 presidential election to keep interest rates low. That episode eventually contributed to a rapid rise in prices, requiring one of Burns’ successors, Paul Volcker, to raise interest rates as high as 20 percent to combat inflation.

In a speech in May, Powell seemed to directly refer to this episode to make the case for the firewall between the Fed and politics, in an apparent precautionary message to Trump.

“For a quarter-century, inflation has been low and inflation expectations anchored,” he said. “We must not forget the lessons of the past, when a lack of central bank independence led to episodes of runaway inflation and subsequent economic contractions.”

Beyond repeatedly affirming the Fed’s political independence, Powell has also made a notable shift in how he communicates compared with his academic economist predecessors: speaking in language that the average person could understand, in the hopes that the Fed will seem less mysterious.

“Because monetary policy affects everyone, I want to start with a plain-English summary of how the economy is doing, what my colleagues and I at the Federal Reserve are trying to do, and why,” he said at the start of a news conference in June.

“In particular, we think that gradually returning interest rates to a more normal level as the economy strengthens is the best way the Fed can help sustain an environment in which American households and businesses can thrive,” he added.

Powell also frequently refers to the limits of Fed power, even clarifying: “I don’t think of myself as the guy running the economy. You know the economy is a $20 trillion economy.”

He has also cautiously avoided any direct criticism of the president’s trade policies, though he has warned of the potential consequences if they lead to prolonged economic warfare.

“I’m not an independent agency that has any authority over trade,” he told a lawmaker who asked whether the U.S. is in a trade war.

Luckily for Powell, members of Trump’s own party are generally supportive of the Fed’s rate hike campaign, favoring a return to a more traditional monetary policy. And Democrats, who are more likely to favor slower increases in the hopes that the unemployment rate will continue to drop, have tended to be less openly critical of the Fed.

“Presidents should respect the independence of the Federal Reserve,” Sen. Sherrod Brown (D-Ohio) said in a statement Thursday. “I asked Chair Powell under oath at his nomination hearing if he would maintain that independence and he assured the Senate that he would. I take him at his word.”

Market participants and Fed watchers alike downplayed the notion that Powell would be swayed by the president, and St. Louis Fed President James Bullard said he was “not surprised” by Trump’s remarks.

“I’m used to debating monetary policy on a wide basis around the world,” Bullard told reporters on Friday. “I doubt there will be any influence one way or another.”