US Federal Reserve Chairman Jerome Powell attends a news conference in Washington, DC, on December 14, 2022.
Liu Jie | Xinhua News Agency | beautiful pictures
Chairman of the Federal Reserve Jerome Powell on Tuesday stressed the need for the central bank to remain politically unaffected while it tackles persistently high inflation.
In a speech to Sweden’s Riksbank, Powell noted that stabilizing prices requires making tough decisions that may be unpopular politically.
“Price stability is the cornerstone of a healthy economy and provides the public with huge benefits over time. But restoring price stability when inflation is high may require measures. It’s not common in the short term when we raise interest rates to slow down the economy,” the president said in prepared remarks.
“The absence of direct political control over our decisions allows us to take these necessary measures without considering short-term political factors,” he added.
Powell’s remarks came at a forum discussing central bank independence, and was followed by a question-and-answer session.
The speech did not contain any direct clues about upcoming policy for a Fed seven rate hikes in 2022, for a total of 4.25 percentage points and showed that More likely to be on the way This year.
While criticism of the Fed’s actions by elected leaders is often taken in a softer tone, the Powell Fed has faced stiff opposition from both sides of the aisle. politic.
Former President Donald Trump ripped the central bank when it raised interest rates during his administration, while progressive leaders like Senator Elizabeth Warren (D-Mass.) criticized the rate hike. present. President Joe Biden largely declined to comment on the Fed’s moves while noting that the central bank’s primary responsibility is to tackle inflation.
Mr. Powell has repeatedly emphasized that political factors did not influence his actions.
In another part of Tuesday’s speech, he addressed calls from several lawmakers for the Fed to use its regulatory powers to tackle climate change. Powell noted that the Fed should “stick to our relationship and not wander off in pursuit of perceived social interests that are not closely aligned with our goals and statutory authorities.” I.”
Although the Fed has asked major banks to check their financial readiness in the event of major climate-related events such as hurricanes and floods, Mr. Powell said it was the right thing to do. .
“Policy decisions that directly address climate change should be made by elected bodies of government and therefore reflect the will of the public as expressed through elections”. “But without clear congressional legislation, it would be inappropriate for us to use our monetary policy or supervisory tools to promote a greener economy or to achieve other goals based on on climate. We are not and will not be ‘climate policymakers’.”
However, the Fed this year will launch a pilot program that will call on the nation’s six largest banks to participate in a “scenario analysis” that will test the stability of institutions in the event of financial crises. major climate events.
The exercise will take place in addition to the so-called stress test the Fed uses to test how banks will perform during a hypothetical recession. Participating institutions are Bank of America, Citigroup, Goldman Sachs, JPMorgan Chase, Morgan Stanley and Wells Fargo.
