DALLAS – The President of the Federal Reserve, Jerome H. Powell, counteracted Trumps’ high and repeated attacks on the Fed without mentioning Mr Trump by name.
Mr. Powell hammed on two simple themes for an hour’s question and answer session in front of several hundred people at the Federal Reserve Bank of Dallas.
Fed does the job, he said, and the economy is going well.
“I’m very fond of the economy now,” said Powell. “There are quite good reasons to believe we will continue in a positive friend as such.”
“Our policy is part of the reason why the economy is so good,” he says.
Mr. Trump has repeatedly attacked Fed to raise interest rates too quickly, describing the central bank as “crazy” “loco”, “going wild” and “out of control.”
Asked about these attacks, Mr. Powell did not respond directly. Instead, he made a point to say twice that Congress is the Fed’s Monitor.
“Our responsibility is really the congress,” he said, driving the Fed’s independence from the executive department. Independent from presidential criticism has long been a hallmark of Fed’s existence and contributing to its ability to maintain monetary policy aimed at keeping inflation stable and the economy run at maximum employment.
He returned to the same theme later this evening.
“We have a very important job that the Congress has assigned us and we have the tools to do that,” said he. “We’re just trying to do the job and it’s fine.”
Mr.. Powell responded to questions from the Dallas Federal President, Robert S. Kaplan, and from the audience. Most who asked questions said they were working on financial services and asked about the economic outlook, the Fed’s plans and regulatory policies.
Mr. Powell acknowledged signs that global growth could slow down, but sparked concern over the volatility of stock markets and describes stock prices as “one of many factors”, the Fed evaluates decision-making.
He said the Fed heard a “rising chorus of concern” from companies about the effects of Trump Administration’s trade restrictions. Mr Trump has imposed tariffs on steel and aluminum and a wide range of Chinese imports, and these actions have caused the retaliation of American trading partners on goods such as metals, peanut butter and whiskey.
Mr. Powell warned that the Fed still saw some evidence of a wide impact from the trade war in the economic data, but he said the concern about protectionism was sensible in theory.
“If it blows up, perhaps unintentionally, in a place where we have more extensive protection, it would be bad for our economy,” he says. “To the extent that more and more products are subject to fees, you can see a little higher inflation and a slower growth. “
He also said that Fed was well aware that the benefits of the economic recovery have not been evenly distributed and that there are pockets in America that have not recovered from the recession.
” We know that there are many people around the edges that have not yet benefited from the recovery, “said Powell.” The best thing we can do is try to maintain this expansion as long as possible. “
But he said there was a broad consensus among Fed officials that the central bank would continue to raise its reference rate in the short term
Invest Re expects an increase of one-quarter of a percentage point at Fed’s next meeting in December, although recent volatility in financial markets has created some uncertainty. Stock prices on Wednesday meant a 73 percent chance for a December increase, according to the CME Group.
Fed is expected to continue raising interest rates in the first half of 2019.
“It would not be surprising for us to have to go up again in December and at least a couple of times next year,” said Mary Daly, the new president of the Federal Reserve Bank of San Francisco in an interview with Bloomberg News on Monday. 19659002] Mr. Powell did not comment on the timing of future interest rate hikes but his optimal economic outlook complies with the expectations that Fed will continue to raise prices.
Mr. Powell has announced that He will hold news conferences after each of Fed’s eight policy making meetings next year, replacing the current pattern of quarterly news conferences. In recent years, Fed has fallen into a pattern to announce political changes at meetings with a press conference. Mr. Powell said Wednesday that the Fed revoked his ability to act at each meeting.
“The Market will need to get used to it, “he said.” Certainly all meetings are alive now. There is no question about it now. I think over time people will get used to the idea that we can and will move at any meeting. “
Desiring to end thoughts, Mr. Powell returned to his two themes.
” I want to take note of optimism about our economy, “he said.” We have gone through a difficult time and we have met hard times before. We are in a good place now. I think our economy can grow and grow faster. “
And he added that Fed does a great job.