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Thursday, January 28, 2021

Chairman Powell stands firm against Trump on Fed independence

Credit: Reuters - Business (Amazon FireT
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Chairman Powell stands firm against Trump on Fed independence
Chairman Powell stands firm against Trump on Fed independence

Federal Reserve Chairman Jerome Powell pushed back at White House criticism, declaring the world's most powerful central bank was designed to be "insulated from short-term political pressures," and is now grappling with the question of when a rate cut will be necessary.

Conway G.

Gittens reports.

SOUNDBITE (ENGLISH): FEDERAL RESERVE CHAIRMAN JEROME POWELL, SAYING: "The Fed is insulated from short-term political pressures; what is often referred to as our independence." Federal Reserve Chairman Jerome Powell minced no words Tuesday as he appeared to address a barrage of criticism from the White House - head on.

SOUNDBITE (ENGLISH): FEDERAL RESERVE CHAIRMAN JEROME POWELL, SAYING: "Congress chose to insulate the Fed this way because it had seen the damage that often arises when policy bends to political interests." Powell - APPEARING BEFORE THE COUNCIL ON FOREIGN RELATIONS - spoke out after President Trump once again took aim at the Fed.

The latest?

A series of tweets Monday declaring the Fed "doesn't know what it is doing," and that was less than 24-hours after saying in a televised interview that he has the power to demote Powell but hasn't considered it yet.

Despite Trump's seemingly not-stop criticism of Powell for not lowering rates, the Fed Chief Tuesday laid out the case as to why the Fed is only considering a possible rate cut, and isn't all the way there yet.

"What's happened is that things have changed since May 1 significantly.

The global risk picture has changed, really just in the last six-to-eight weeks and it's around trade developments and concerns about global growth.

And again, our focus is looking forward through the windshield at what the right setting is for monetary policy going forward to achieve our goals." But that doesn't mean the Fed is hellbent on cutting interest rates in July as financial markets seem to think so.

Sure, Powell pointed to weak global factory activity and muted inflation around the world as reasons to be concerned.

But he also pointed to a strong consumer and a plentiful job market as reasons the Fed will think hard before cutting rates - no matter what kind of pressure comes from 1600 Pennsylvania Avenue.

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