Powell Reiterates Fed’s Independence at Democrats’ Retreat
Federal Reserve Chairman Jerome Powell reiterated the independence of the central bank Thursday night in a closed-door meeting with House Democrats and said he wouldn't comment on President Trump or his potential nominees to the Federal Reserve's board.
Mr. Powell made clear that he saw his role as apolitical and valued the central bank's independence, according to lawmakers who watched him speak at the party's retreat. He was interviewed by Rep. Joyce Beatty (D., Ohio), who leads a House Financial Services Committee panel, and later fielded questions from House Democrats.
Mr. Powell has come under repeated attack this year from Mr. Trump. The president has blamed the Fed for holding back the economy and stock market.
Mr. Powell conveyed that the Fed is "nonpartisan and unswayed by political pressure," said Rep. Jim Himes (D., Conn.), also a member of the Financial Services Committee.
Mr. Powell said he would not discuss former restaurant executive Herman Cain or former Trump campaign adviser Stephen Moore, both of whom the president has indicated he intended to nominate for the Fed board. Earlier Thursday, four GOP senators said they would oppose the nomination of Mr. Cain, effectively dashing Mr. Trump's hopes of putting a political ally on the powerful body.
"He was happy to point out that he had no role in determining who was appointed," said Rep. Brad Sherman (D., Calif.), also a member of the Financial Services Committee.
Mr. Powell has served in the Treasury Department under Republican President George H.W. Bush and was later appointed to the Fed by Democratic President Barack Obama, which he reminded the group to illustrate his point, Ms. Beatty said.
On the economic front, Mr. Powell said the U.S. economy was "in reasonably good shape on the employment front," but said the Fed was aware of racial disparities and that "many families can't afford several hundred dollars of expenses," Mr. Himes said. He also discussed the central bank's efforts to promote diversity in its regional Fed banks, Ms. Beatty noted.
While Mr. Powell generally stayed away from discussing fiscal policy, he praised the efficacy of the earned-income tax credit, which is designed to help working people with low to moderate incomes, Mr. Sherman said.
He also urged lawmakers not to consider defaulting on the country's debt when the debt limit has to be raised later this year, in response to a question from House Majority Leader Steny Hoyer (D., Md.)
Mr. Powell "said it's unthinkable that we wouldn't pay all of our obligations in full and on time," Mr. Himes said. "It's not only unthinkable, it's something we shouldn't even discuss."
The federal borrowing limit, which was suspended last year as part of a two-year budget agreement, was reinstated on March 2. The Treasury began using extraordinary measures at that time to conserve cash and keep making on-time payments to bondholders, federal benefit recipients and others.
The Congressional Budget Office has estimated the Treasury can keep paying the government's bills on time until late September or early October, around the same time the government's current funding expires.
Mr. Powell also noted that the "global economy is more integrated than ever before," but that he worries about slowing growth in Europe and China, Mr. Himes said. He noted that reasons for moderated U.S. growth include "slowing global growth, uncertainty around trade negotiations and uncertainty around Brexit," Mr. Himes said.
"He did in the end make a fairly poignant observation—he said the world is looking for constructive American leadership and that the Fed tries to provide it" at global meetings of central bankers, Mr. Himes said.
Lawmakers said Mr. Powell was well received by the crowd of House Democrats.
"There is no better way to be beloved by the Democratic caucus than to be insulted by Donald Trump or to have Donald Trump announce that he is for your opposite," Mr. Sherman said.
This article was originally published by the Wall Street Journal on April 12, 2019.