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U.S. inflation accelerated in January, unwelcome news to markets, companies and consumers hoping for interest rate relief, as unflappable Federal Reserve chief Jerome Powell sat for a second day on Capitol Hill peppered with questions from lawmakers about the Fed’s independence, Elon Musk and Donald Trump — who slammed high rates in a social media post today.
“You previously said that you would not resign if [Donald] Trump asked you to do that. Do you stand by that commitment?” asked one lawmaker on the House Financial Services Committee.
“I have no changes to that,” Powell responded.
“Would you like to tell us today that you won’t let DOGE into the Federal Reserve to have access to the systems and the data?” asked another, referring to the new Musk-led Department of Government Efficiency.
“We’ve had no contact. And I have nothing to report today on that,” said Powell.
And asked about the Fed independence at a time of disconcerting reach by the Trump Administration, he said it’s key. “Politicians who want to be re-elected … are not going to be focused on the longer term. We have that mandate. To stay out of that. To stay out of election cycles … serving the public as a whole.” That understanding, of the need for an independent central bank, is uniform across all developed economies, he added.
His comments came as the consumer price index increased 3% in January from a year ago, data from the Labor Department showed, up from 2.9% in December and from a three-and-a-half year low of 2.4% in September. The CPI less the volatile food and energy index rose 3.3% over the last 12 months. The oft discussed price of eggs jumped 15.2% amid an avian flu epidemic.
In separate posts on Truth Social, President Donald Trump wrote, “BIDEN INFLATION UP!” and “Interest Rates should be lowered, something which would go hand in hand with upcoming Tariffs!!! Lets Rock and Roll, America!!!” even as investors worry a flurry of tariffs will raise consumer prices further.
“On inflation, we’re close but not there,” Powell said today.
Asked if the President’s comments would influence Fed action, he said, “As a practice, I never comment on anything the President says. But I think people can be confident that we’ll continue to keep our heads down, do our work, make our decisions based on what’s happening in the economy.”
The Federal Reserve cut rates three times last year after a succession of brutal hikes to curb runway post-Covid inflation. They still remain high as with inflation still above the Fed’s target of 2%. In testimony yesterday before the Senate Banking Committee, Powell indicated caution. “We’re in a pretty good place with this economy. We want to make more progress on inflation. And we think our policy rate is in a good place, and we don’t see any reason to be in a hurry.”
High prices created a major political headache for former President Joe Biden and hurt the Democrats in the last election. Trump pledged to reduce prices in last year’s campaign. But last week he imposed 10% tariffs on Chinese goods, on Monday, 25% tariffs on steel and aluminum imports set to start in March, and has pledged more to come.
At midafternoon, the Dow Jones Industrial Average is down 224 points, well off its lows. The Nasdaq, S&P 500 and Russell 3000 are also in the red. Media stocks are mixed with Disney up a hair, Comcast and Warner Bros. Discovery slightly lower with Amazon and Google parent Alphabet. Netflix, Fox, Apple, Meta and Spotify are trending higher.
