The Federal Reserve is subtly but unmistakably gearing up for a battle to defend its political independence as Donald Trump closes in on the 2024 presidential election.

In an otherwise dry report to Congress, the Fed included an unusual text box emphasizing the "broad support" and "international norm" for central banks to operate free from political pressure.

The message seems squarely aimed at shoring up bipartisan support on Capitol Hill, at a time when some in the Trump camp are advocating aggressive steps to curtail the Fed's autonomy.

"I do think support for Fed independence is very high where it really matters on Capitol Hill, in both political parties," Powell said Tuesday at a conference in Portugal. "I worry about getting the job done. That's what I worry about."

The Fed's twice-yearly report rarely delves into such pointed commentary on its political standing, making the inclusion of this text box all the more noteworthy.

“There is broad support for the principles underlying independent monetary policy,” the report says. “Operational independence of monetary policy has become an international norm, and economic research indicates that economic performance has tended to be better when central banks have such independence.”

The addition of this section hints that the Fed thinks it may be in for a fight over its independence as the prospect of a Trump presidency looms larger.

Trump's past criticism and plans for the Fed

As president, Trump frequently criticized Fed Chair Jerome Powell, whom he appointed, for not lowering interest rates faster. At one point, he even suggested Powell was a bigger "enemy" than China's leader.

While Biden re-nominated Powell to a term ending in May 2026, Trump has signaled he would not do the same if elected president again.

Recently, the Wall Street Journal reported on plans within the Trump camp to restructure the Fed as we know it. With Trump poised for another White House win, the Fed appears to be proactively defending its independence.

Powell's remarks come at a time when other central bank leaders face similar political pressures. Brazil's central bank president, Roberto Campos Neto, is contending with attacks from his country's president, who wants lower interest rates.

Powell "not focused" on Trump

The Fed chief declined to comment on the possibility of Trump being re-elected, saying only, "I am not focused on that at all."

Instead, he emphasized the importance of the central bank staying the course. "Let's keep that going," Powell said, then added, "Let's do our jobs. History will judge."

As evidence that the Fed is on the right track, Powell pointed to the strength of the U.S. economy, with historically low 4% unemployment, steady growth, and cooling inflation.

"I think if we can keep things on that path, that's what I am focused on," he said.

Powell warned about the risks of running large deficits while the economy is at full employment, calling it an issue that "should be a top-level issue" and "a real focus going forward."

However, he declined to weigh in on potential Republican tax cuts after 2024.