Federal Reserve Chair Jerome Powell emphasized that the central bank’s mandate is to keep inflation in check and support a strong job market, not to consider government financing needs. Powell stated that setting interest rates to accommodate government borrowing would compromise the Fed’s credibility and ability to control inflation. The Fed maintained its interest rate target range at 4.25% to 4.5% amid ongoing assessment of the economic impact of import taxes. President Trump has urged rate cuts to address government borrowing costs, but lowering rates could fuel inflation and raise bond yields, potentially increasing government borrowing costs. Critics have accused the Fed of keeping rates low to facilitate government deficit spending, a claim rejected by central bankers. A recent Republican tax and spending bill is expected to raise government borrowing, potentially increasing interest rate costs for the government.

Read more at Yahoo Finance: Powell says Fed does not consider government interest rate costs in policy debate