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Powell Hesitant to Cut Interest Rates With Inflation Above Target
Jerome H. Powell, chair of the Federal Reserve, testified before the Senate Banking Committee in the face of continuing inflation risks, shifting regulatory changes and questions over the Federal Reserve’s independence.
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“If the economy remains strong and inflation does not continue to move sustainably toward 2 percent, we can maintain policy restraint for longer. If the labor market were to weaken unexpectedly, or inflation were to fall more quickly than anticipated, we can ease policy accordingly. We are attentive to the risks on both sides of our dual mandate, and policy is well-positioned to deal with the risks and uncertainties that we face.” “All things being equal, do big increases in tariffs and increasing the deficit and debt put upward pressure on inflation? Isn’t that simple math?” “It really does remain to be seen what tariff policies will be implemented. And I just think it would be unwise to speculate when we really don’t know. I, too, am troubled by the quantity of these reports and really want to understand better why this is happening. One theory is that banks are just very risk averse around B.S.A. and money laundering, and that’s because we’re so tough on them and that they just don’t — any red flag is enough. But I think this needs a fresh look. And I think it’s time for that, and we’re going to do that.” “Could you outline the Federal Reserve’s role in supporting and managing the Treasury’s payment systems, including how the Fed works to keep these systems secure, efficient and capable of handling the government’s high volume of daily transactions?” “Congress authorized spending and then the agencies carry out those spending orders. We take the money out of the Treasury general account and we make the payment. We make no judgments whatsoever. Those are all made upstream from us.” “Is the system safe today.” “I believe it is. And I will tell you, we are very strongly committed to the integrity, efficacy, resilience and all those things of this system. And people do depend on this in a big way, and we’re committed to that.” “What would you do if the president tried to remove a member of the Federal Reserve Board?” “Well, it’s pretty clearly not allowed under the law.”
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