Jay Powell really wants Americans to know he is not thinking about politics

Jay Powell really wants Americans to know he is not thinking about politics

Jay Powell really wants Americans to know that the Federal Reserve is not taking into account the presidential election or politics this year when setting monetary policy.

The Fed chairman went out of his way to drive that point home last week while delivering a speech that devoted more time to discussing the Fed’s independence from personal or political bias than it did interest rates or inflation.

“Fed policymakers serve long terms that are not synchronized with election cycles,” Powell said while speaking to an audience at Stanford University. “This independence both enables and requires us to make our monetary policy decisions without consideration of short-term political matters.”

During a question and answer session after his speech, he said that “internally we have peace of mind on this” and that “we are going to do what we are going to do and we will do it for economic reasons and that’s it.”

He added: “I don’t have concerns that it’s going to be a problem for us” and that “it doesn’t matter what the election calendar is saying.”

Jay Powell really wants Americans to know he is not thinking about politicsJay Powell really wants Americans to know he is not thinking about politics

Federal Reserve Chair Jerome Powell before giving a speech at Stanford University on Wednesday. (Justin Sullivan/Getty Images) (Justin Sullivan via Getty Images)

Both sides of the aisle are trying to influence Powell and the Fed as the November election draws closer and the central bank weighs the right time — if at all — to lower rates after an aggressive campaign to tamp down inflation.

Democrats tend to want these cuts as soon as possible, while Republicans, by and large, want Powell to take it slow.

Their strategies for driving these points home can be very different but the politicians agree on a key election year dynamic at play: Rate cuts before the election are likely to be helpful to President Joe Biden and the White House — whether or not that is Powell’s intention.

Last week was not the first time Powell asserted the Fed’s independence in 2024. He did the same during a “60 Minutes” interview that aired in February.

“We do not consider politics in our decisions,” Powell said in that interview. “We never do. And we never will. And I think the record — fortunately, the historical record really backs that up.”

Powell in recent months has also demurred when reporters or lawmakers asked him to provide his view on other policy topics — such as whether to rein in America’s national debt, change the tax code, or reform the immigration system.

“It’s not our role at all to be a judge of fiscal policy in any way,” Powell told CBS earlier this year.

On Wednesday he returned to that theme, saying the Fed will avoid what he called “mission creep” on topics ranging from taxes to immigration and climate.

“We are not, nor do we seek to be, climate policymakers,” he said during his speech.

His remarks on climate came roughly two weeks after Senators Elizabeth Warren and Sheldon Whitehouse sent a letter to Powell arguing the Fed’s high interest rates were delaying clean energy developments.

U.S. Senator Elizabeth Warren (D-MA) questions witnesses during a Senate Banking, Housing, and Urban Affairs Committee hearing in the wake of recent bank failures, on Capitol Hill in Washington, U.S., May 18, 2023. REUTERS/Evelyn HocksteinU.S. Senator Elizabeth Warren (D-MA) questions witnesses during a Senate Banking, Housing, and Urban Affairs Committee hearing in the wake of recent bank failures, on Capitol Hill in Washington, U.S., May 18, 2023. REUTERS/Evelyn Hockstein

Senator Elizabeth Warren (D-Mass.) is among the lawmakers applying pressure on Fed Chair Jay Powell. (Evelyn Hockstein/REUTERS) (REUTERS / Reuters)

“We urge you to cut interest rates throughout 2024 to allow for continued progress on clean energy projects and the climate and economic benefits these projects provide,” wrote the senators, who are both Democrats.

Republicans have also repeatedly come down on Powell for considering rules that would test banks’ ability to withstand climate-related scenarios, arguing it falls out of the scope of the Fed’s authority.

Powell was very clear last week that the Fed would avoid climate policy.

“Policies to address climate change are the business of elected officials and those agencies that they have charged with this responsibility. The Fed has received no such charge.”

In a statement to Yahoo Finance following Powell’s latest remarks, Sen. Whitehouse pointed out that other central banks around the world closely consider climate change because “if left unchecked climate change will pose ‘systemic risks’ to our financial system and the broader economy.”

U.S. Senator Sheldon Whitehouse (D-RI) speaks during a Senate Judiciary Committee hearing on U.S. Senator Sheldon Whitehouse (D-RI) speaks during a Senate Judiciary Committee hearing on

Senator Sheldon Whitehouse (D-R.I.). (Evelyn Hockstein/REUTERS) (REUTERS / Reuters)

He also noted recent remarks from Powell about insurance rates — which are high partly because of climate change — acting as a drag on the economy.

“It seems obvious that the Federal Reserve should consider both climate-driven inflation and climate-driven systemic risks,” Whitehouse said.

Powell on Wednesday talked specifically about attempts by lawmakers to drag him into partisan political debates.

A moderator asked him to discuss how he builds consensus in Washington and he described what it is like when he testifies on Capitol Hill.

“People are always trying to get me and my colleagues to support their perspective on fiscal issues or immigration issues and they think of an economic hook…”

Powell then mimicked reeling in a fishing line, generating laughs from the audience.

“But we just don’t do that.”

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