Federal Reserve Chairman Jerome Powell testified before the Senate Banking Committee on Tuesday. He said there is no need for central banks to hurry to further cut interest rates. ChipSomodevilla/Getty Images North America Hide Caption
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ChipSomodevilla/Getty Images North America
Don’t expect interest rates to fall anytime soon.
Federal Reserve Chairman Jerome Powell told Senate committee Tuesday that he and his colleagues “don’t have to hurry” to cut interest rates as strong job markets and inflation are still rising. He said.
Powell also submitted questions about President Trump’s economic policies and the Fed’s own banking supervision. And, as always, the Fed chairperson tried to avoid politics.
In a six-month report to Congress, Powell said the central bank had cut its benchmark interest rates in full last year. Further reductions will have to wait until inflation cools further or until significant softening of the job market occurs.
Trump and inflation
The Fed also faces great uncertainty. Trump’s tariff policies could put more upward pressure on prices, making it difficult for central banks to cut prices. On Monday, Trump ordered 25% tariffs on all imported steel and aluminum. He also threatens widespread taxes on other imports.
Powell refused to comment on the merits of the president’s trade policy, saying it would be a settlement for Congress and the administration.
Dr. Jack Reed wondered if Trump would be equally careful about leaving the federal lane.
“Just this weekend, the president removed the Kennedy Center board and served as chairman,” Reid said in a statement by Trump last weekend. “What would you do if the President attempts to remove members of the Federal Reserve Committee?”
Powell argued that it was “obviously not permitted under the law.”
Currently, there are no vacant seats in the Federal Reserve president, so Trump’s power to reshape the central bank is limited. But he will have a chance to go down the path. Powell’s own term as a chair will end in May next year.
Focus and “banking”
The Republican senator also quized Powell on complaints that it had prevented them from working with banks to work with several companies that had benefited politically during the Biden administration, particularly crypto companies. I did.
“If it’s legal to do business in America, Sen. Tim Scott, who chairs the Banking Committee, said:
Powell said he was also hit by complaints about him “unloading” and that the Fed has pledged to take the banking supervision manual “a fresh look.”
Democrats warn about the CFPB
While most banking regulations aim to ensure the safety and soundness of the financial system, one institution’s mission is to be aware of consumers. D-Mass. Senator Elizabeth Warren led the push to establish the Consumer Financial Protection Bureau after the major financial crisis. And she is furious that the Trump administration has effectively shut down the bureau.
“There’s no better cop in Beat. I’m looking for a grandma whose bank account has just been taken over by a scammer,” Warren said. “There are no more Beat cops looking for people being fooled by the huge credit card companies charging illegal junk fees.”
Warren urged Powell not to become a “co-incident” of its closure by suffocating the funds of the Watchdog Agency. The Consumer Bureau was established to receive automatic funding from the Fed to prevent interference by members of Congress.
