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Jay Powell vowed to avoid swimming into politics “with a data focus” despite calls from the White House and some lawmakers, and thus the Federal Reserve power over US monetary policy. defended.
The Fed has faced the most intense challenge to independence, setting interest rates since the 1980s, and during his first week at the White House, Donald Trump has a better understanding of monetary policy than central banks. It’s claiming. Trump also said borrowing costs should be lower.
Federal Reserve Chairman Powell told lawmakers on Tuesday on the Senate Banking Committee that if the central bank exceeds the fight, it is likely that prices will be under control. interference.
“We create better policies, we keep inflation lower if we focus on doing our work, we leave politics, leave elections and not support or hurt political parties and politics. Powell said in his first appearance before an influential committee since Trump returned to presidency: “If we start installing political filters, it’s not very effective on already extremely difficult tasks. It’s not the point.”
Powell asserted that Trump’s decision to loot one of the seven members of the Fed’s board “is clearly not permitted under the law.”
The remarks come as some Democrats are concerned that the Fed is already responding to Republican pressure.
At the hearing, the Democratic senator announced the decision to terminate the so-called stress testing rules for the country’s biggest banks, the resignation of the role’s chief supervisor, Michael Barr, and the network for greening the financial system. We cited the Fed’s plan to reconsider. It is evidence that it was succumbing to the Republican attacks.
However, Powell on Tuesday made it clear that he would not respond to pressure from new administrations and lawmakers on either side of the aisle regarding monetary policy.
The Fed chair reiterated that strong growth means that interest rate setters are “not in a hurry” to reduce borrowing costs lower than current levels of 4.25% to 4.5%.
Many right-leaning Americans are being criticised for their political tendencies at hearings where the Trump administration is dominated by Democrats’ concerns over the Consumer Financial Protection Bureau and Republicans’ cries There, Powell refused to be attracted to the economic outcomes of the president. The action may be.
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“It really remains to see what the tariff policy is in place. It’s not wise to speculate when we really don’t know. We see suggestions, but it’s very important to say what happens. It’s difficult,” Powell said. “It’s not just tariffs, it’s tariffs, immigration, fiscal policy, regulatory policy. We understand that and try to do the right thing with monetary policy.”
New York Fed Chairman John Williams on Tuesday showed that he should wait to see how the economic situation has evolved before deciding whether to cut fees.
While borrowing costs remained “conservatively restrictive,” Williams said the outlook is “very uncertain, particularly regarding potential fiscal, trade, immigration and regulatory policies.”
