Trump Meets With Fed Chair Powell for a ‘Cordial’ Talk

WASHINGTON — Federal Reserve Chair Jerome H. Powell met with President Trump on Monday to discuss the economy, a first since Mr. Trump labeled the central bank head and his colleagues “boneheads” and questioned whether Mr. Powell or President Xi Jinping of China was a bigger “enemy” of America.

The meeting, which the Fed said came at Mr. Trump’s request, is the first between Mr. Powell and the president since February. The intervening months have seen Mr. Trump regularly take to Twitter or television to criticize central bankers for keeping interest rates too high, often comparing United States monetary policy unfavorably to the negative rates that prevail in Europe.

In September, Mr. Trump tweeted that “the USA should always be paying” the “lowest rate” and called Fed officials “boneheads.” In August, he asked on Twitter, “who is our bigger enemy, Jay Powell or Chairman Xi?”

On Monday, Mr. Trump tweeted that he had just finished “a very good & cordial meeting” with Mr. Powell, and that “everything was discussed including interest rates, negative interest, low inflation, easing, Dollar strength,” among other topics. Treasury Secretary Steven Mnuchin also attended the meeting.

The Fed said in a statement that Mr. Powell did not discuss the outlook for interest rates with the president, “except to stress that the path of policy will depend entirely on incoming information that bears on the outlook for the economy.”

It then reiterated the central bank’s independence from the political process. While Federal Reserve Board officials are nominated by the White House and answer to Congress, they are granted independence in pursuing their goals of stable inflation and maximum employment — a separation from politics that the institution guards closely.

“Chair Powell said that he and his colleagues on the Federal Open Market Committee will set monetary policy, as required by law, to support maximum employment and stable prices,” the Fed said, adding it would “make those decisions based solely on careful, objective and nonpolitical analysis.”

The relationship between the central bank and the White House soured starting in 2018, when the Fed was steadily increasing interest rates. The Fed, under Mr. Powell, raised rates four times in 2018, prompting Mr. Trump to accuse the central bank of undermining American economic growth.

The Fed has since cut interest rates three times this year, in an effort to insulate the economy against economic damage created by Mr. Trump’s ongoing trade war in China and Europe and slowing global growth.

While those moves came in response to weakening economic conditions, a message that officials underlined time and again, some onlookers perceived them as a sign that the central bank was caving to the president’s demands.

Mr. Trump has remained unimpressed, continuing to blast the Fed for not cutting fast enough or far enough, including calling on the central bank to slash rates below zero.

Pushing back against political encroachment is a priority for the Fed, because research consistently shows that independent central banks achieve better outcomes. That is because monetary policymakers try to keep the economy operating at an even keel, whereas politicians concerned with short-term re-election prospects often want to goose the economy to improve their chances — even if that comes at a cost to economic stability down the road.

Larry Kudlow, the top White House economic adviser, said last week at the Council on Foreign Relations that he would not be particularly concerned if the Fed did not lower interest rates again before the 2020 election, Politico reported. But Mr. Kudlow has also been an occasional critic of negative rates, which Mr. Trump views more favorably.

Mr. Powell, who testified on Capitol Hill last week, said negative rates were not needed in the United States right now.

While the euro area and Japan have negative borrowing costs, an effort to coax growth and inflation higher, the Fed’s key interest rate is set in a range of 1.5 percent to 1.75 percent.

“Negative interest rates would certainly not be appropriate in the current environment,” Mr. Powell said. “Our economy is in a strong position — we have growth, we have a strong consumer sector.”