The Fed hiked borrowing costs significantly starting in 2022 in an effort to stabilise prices, which were then rising at a pace not seen in decades.
Inflation, the rate of price increases, has since fallen to 2.9% as of December, but remains above the bank’s 2% target.
Trump’s campaign promises included calls for lower interest rates, which would bring relief to borrowers.
It has sparked debate about whether he will respect the tradition of Fed independence, which is meant to keep it focused on the long term health of the US economy and insulated from politics.
Powell told reporters that he had had “no contact” with Trump and the bank was focused on the data in setting rates.
But questions Powell faced about how the Fed is handling a new order from the White House to cancel diversity programmes – and why it had withdrawn from a global group of central banks focused on the risks of climate change to the financial system – underscored the challenges he will face keeping the bank above the political fray.
He said the Fed was reviewing the president’s order and said the group’s focus had expanded into areas too distant from the Fed’s.
“I’m aware of how it can look but it really was not driven by politics,” he said.
