Powell: The government's interest rate costs are not taken into account in monetary policy making

Federal Reserve Chairperson Jerome Powell said Wednesday that the central bank has no room to consider the government's financing needs when setting interest rate policy. Powell said at a news conference after the FOMC meeting that the Fed has a congressionally mandated mandate to control inflation while keeping the job market as strong as possible. Given that statutory mandate, he said, "we don't take into account the fiscal needs of the federal government. No central bank in an advanced economy would do that," an approach that would also damage the Fed's credibility. The U.S. government paid $1.10 trillion in interest payments last year, and the cost of managing government debt has more than doubled from before the COVID-19 pandemic, largely due to the Fed's high interest rates to keep inflation down. Trump has said that if interest rates were cut by 3%, the United States would save $1 trillion a year.