Federal Reserve Chair Jay Powell made it clear this week that the topic of upcoming elections isn’t discussed at the Fed’s meetings, challenging reporters to check the meeting transcripts for themselves. “I can’t say it enough: We just don’t go down that road,” he told reporters on Wednesday when asked if the Fed has a higher threshold for changing interest rates close to election season.
He threw down a challenge: “You can go back and read the transcripts,” he said. “See if anybody mentions, in any way, the pending election.”
When Yahoo Finance took Powell up on his challenge, reviewing years of Federal Open Market Committee (FOMC) meeting transcripts, they found that Powell was right—there were few explicit references to elections, and no debates over the political benefits of one candidate over another. But the transcripts still contained numerous discussions about the possible economic effects of political events, including elections, and the potential political backlash to the Fed’s decisions.
At a January 2018 meeting, Minneapolis Fed president Neel Kashkari acknowledged the tension between staying apolitical while existing in a politically charged environment. With then-Chair Janet Yellen set to step down and Powell taking over, he noted the balance that needed to be struck. “We work very hard, all of us, to be nonpolitical and nonpartisan, and yet we exist in a partisan, political world,” Kashkari said, praising Yellen for her ability to “navigate that tension.”
In the seven meetings that Powell chaired in 2018, the word “political” was used 40 times, according to a search of the transcripts. The committee’s discussions included everything from then-President Trump’s trade policies to developments in Europe to the impact of “political tensions in the United States” during an election year.
Fed officials consider political risks regularly, according to Federal Reserve historian Sarah Binder, who has studied the transcripts. Politics often come into play when discussing sensitive issues like setting inflation targets or managing the Fed’s balance sheet. Binder noted in a statement to Yahoo Finance that the frequent mentions of politics in the FOMC meetings suggest that these factors are part of the broader considerations that shape the Fed’s statements and policy decisions.
