Political attacks by US President Donald Trump played no role in the US Federal Reserve’s decision in January to signal that it planned to take a pause in hiking interest rates, Fed Chairman Jerome Powell said in an interview broadcast on Sunday.
Powell said that he cannot be fired by Trump and that he intends to serve out his full four-year term.
In a wide-ranging interview with CBS’s 60 Minutes TV program, Powell said that the Fed decided to pause its rate hikes in January, after increasing rates four times last year, because the global economy was slowing and other risks to the US economy were rising.
Photo: AFP
The Fed said it planned to be “patient” in deciding when to change rates again.
Asked to define patient, Powell said: “Patient means that we don’t feel in any hurry to change our interest rate policy.”
At another point, Powell said that the Fed felt its rate policy “is in a very good place right now” with the benchmark rate in a range of 2.25 percent to 2.5 percent, which Powell said was “roughly neutral,” meaning that the Fed’s policy rate was neither stimulating growth nor holding it back.
“We think that’s an appropriate place for an economy that has the lowest unemployment in 50 years, that has inflation right about at our 2 percent objective, that has returned significantly to good health,” Powell said.
Powell said that in the past three months, the Fed has seen increasing evidence of a global growth slowdown with slower activity in China and Europe and potential threats from such events as Brexit.
“We’ve said that we’re going to wait and see how those conditions evolve before we make any changes to our interest rate policy and that means patient,” Powell said in the interview with Scott Pelley.
Powell said that despite outside criticism, the Fed would always “make decisions based on what we think is right for the American people... We will never, ever take political considerations into effect.”
Asked if Trump could fire him, Powell said: “The law is clear that I have a four-year term — and I fully intend to serve it.”
Former Fed chairman Ben Bernanke and Powell’s immediate predecessor, Janet Yellen, both appeared with Powell during the Sunday broadcast. Powell was picked for the top Fed job by Trump after the president decided not to offer a second term to Yellen. Both Bernanke and Yellen were asked what advice they had given Powell on withstanding outside criticism.
Bernanke said that he kept a quotation from former US president Abraham Lincoln on his desk that said if your decisions turn out to be correct, the criticism will not matter.
Yellen said that she and Powell had worked together closely on the Fed and that Powell was doing a good job of being “inclusive” in his decisionmaking.
In the broadcast, Powell said that while he felt US growth would slow this year, he did not feel the country was headed for a recession.
“The outlook for our economy, in my view, is a favorable one,” Powell said. “This year, I expect growth will continue to be positive and continue to be at a healthy rate.”
The economy grew at a solid 2.9 percent rate last year, but economists believe that with the global economy slowing, the US economy is likely to slow to growth of just more than 2 percent.
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