Federal Reserve Chair Jerome Powell has repeatedly pledged to ignore politics, but that isn't stopping both sides of the aisle from trying to influence him as the election draws closer.
Democrats tend to want cuts as soon as possible, while Republicans, by and large, want Powell to take it slow. Their strategies for driving these points home can be very different depending on who is doing the pressuring and where that persuasion is taking place.
And while they may disagree on tactics, these politicians agree on a key election year dynamic at play: Interest rate cuts before the election are likely to be helpful to President Joe Biden and the White House — whether or not that is Powell's intention.
As such, Democratic lawmakers have tended to be blunt in their calls for lower interest rates. Even Biden, who has often avoided any public conversations of monetary policy, dipped his toe in recently by suggesting that the "little outfit that sets interest rates" would bring down rates soon.
"I can't guarantee it, but I bet you," he told the crowd in Pennsylvania on Friday as he discussed different ways to help out homeowners facing high costs.
Read more: What the Fed rate decision means for bank accounts, CDs, loans, and credit cards
Most Republicans, meanwhile, have pleaded with Powell to ignore the political noise while making clear they have a preference that the Fed not cut rates "prematurely." Donald Trump has been even more confrontational, suggesting that Powell wants to "help the Democrats" in the months ahead.
"There isn't really any safe harbor here for the Fed," said Fed historian Sarah Binder. "They're in the middle of the story here, even if they'd really prefer not to be."
Powell has tried to set out very clear guideposts for his decision making. Limiting his options "might be part of the game," said Desmond Lachman, a former managing director at Salomon Smith Barney currently at the American Enterprise Institute.
"He knows that this year is an election year, and the more he boxes himself in," perhaps the less opportunity there is for the political pressure to be felt.
Differing strategies on Capitol Hill
The differing strategies from lawmakers were clearly in evidence last week as Powell faced two days of questioning before House and Senate committees.
"It will likely be appropriate to begin dialing back policy restraint at some point this year," he told lawmakers on both days, "but the economic outlook is uncertain, and ongoing progress toward our 2% inflation objective is not assured."
The Republican response was often focused on holding Powell to that pledge.
Rep. Patrick McHenry of North Carolina began the marathon questioning by telling Powell inflation had not been "extinguished" and urging him to ignore any pressure to cut rates too soon.
"The credibility of the [Federal Reserve] depends on your remaining data-driven," added Sen. Bill Hagerty of Tennessee almost 27 hours later as the testimony wound down. "I encourage you to continue to maintain that posture," the Republican added.
While these GOP lawmakers and others had a clear message to send Powell's way, they also all aimed to do it in a friendly manner.
"I'm struck by how respectful Republicans are of Powell as Fed chair, even though his current appointment was by Biden," Binder said, noting recent reports of how much time and energy Powell has put into courting lawmakers
"That pays dividends for him with relationships in these types of hearings," she said.
Many Democrats, meanwhile, were more confrontational. Some even questioned the Fed's 2% mandate entirely.
"Interest rates are too damn high," Congresswoman Ayanna Pressley of Massachusetts told Powell in one colorful moment.
Rep. Maxine Waters made a similar point in an interview with Yahoo Finance's Jennifer Schonberger, saying, "People are paying a disproportionate amount of their income for things that are necessities like food, and so we've got to bring those rates down."
A different array of tactics on the presidential campaign trail
But if Democrats on Capitol Hill are the confrontational ones and Republicans are using a softer glove approach, that dynamic is nearly exactly reversed on the presidential campaign trail.
Trump has made it abundantly clear that he will attack any rate-cutting move in the months ahead. The presumptive GOP nominee initially appointed Powell to his post back in 2017 but soon turned on him and now calls him political and says he won't give him a third term.
"I think [Powell's] going to do something to probably help the Democrats," Trump said in a recent Fox Business interview.
Biden, his recent brief foray into monetary policy notwithstanding, has usually tried to avoid publicly commenting on Powell as much as possible since reappointing him to his position in 2021.
Biden has voiced his support for his nominee but generally avoided weighing in on the question of whether rates should or will go up or down. His prediction last Friday that rates would come down offered a slight departure from that strategy, however.
What will Powell do?
What remains to be seen is if any of these many approaches sway Powell. But recent data appears to be helping the broader GOP case for slower action.
A new inflation report on Tuesday showed price pressures continuing; the Consumer Price Index (CPI) rose in February by 3.2% over the prior year, an acceleration from January's 3.1% annual gain.
Some market watchers reacted to the news by suggesting the sticky inflation numbers wouldn't necessarily be enough to change plans for cuts this year.
Investors are currently wagering only about a 30% chance that the interest rate levels will be unchanged after the June meeting, but the odds ticked up slightly Tuesday on the inflation news, according to data from the CME Group.
Powell is getting plenty of pressure from Wall Street as well. JPMorgan Chase (JPM) CEO Jamie Dimon recently said he is in favor of keeping rates steady through July at least.
"You can always cut it quickly and dramatically," Dimon said Monday. "Their credibility is a little bit at stake here. I would even wait past June and let it all sort it out."
Apollo Global chief economist Torsten Sløk is already on the record predicting zero cuts in 2024 and said Tuesday's inflation number "means the Fed will keep rates higher for longer." (Disclosure: Yahoo Finance is owned by Apollo Global Management.)
It all adds up to a complicated picture for Powell in the months ahead.
"The political pressure will be there," said Lachman, who is in the camp that the Fed should consider cuts sooner to address things like a growing commercial real estate problem for the economy.
He also said Powell still has plenty of levers he can pull in the months ahead even if he's in a holding pattern on the interest rate decision, such as adjustments to the Fed's balance sheet.
"That's another part of the monetary policy that doesn't get that much attention," he noted, "so he can mess around with that as well."
Ben Werschkul is Washington correspondent for Yahoo Finance.
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