Fed’s Powell, in Trump’s crosshairs, gets backing from Congress
Lawmakers from both sides make it clear they are siding with Fed chairman, whose term ends in 2022
SAN FRANCISCO/WASHINGTON : Federal Reserve chairman Jerome Powell came to Capitol Hill on Wednesday with two goals: Cementing the case for an interest rate cut at the end of this month, and bolstering his own congressional wall of protection against a president who has made a daily habit of Fed bashing unseen since the 1970s.
Well before the end of the first of his two days of testimony before Congress, Mr Powell had accomplished both.
Mr Powell's pledge to "act as appropriate" to lengthen the already record-long US economic expansion fuelled financial market bets for a rate cut of at least a quarter of a percentage point when the Fed meets at the end of this month.
But running through more than three hours of testimony before a US House of Representatives panel was a second, equally important, thread: A clear play to congressional opinion that any rate cut would be driven not by President Donald Trump's call for one but by the economy.
It began with Mr Powell telling lawmakers that he was accountable "to you and the public", not the political interests of the President who appointed him.
Mr Trump has repeatedly expressed his unhappiness with Mr Powell's failure to cut rates and has said he has the power to fire the Fed chair.
Lawmakers on both sides of the aisle on Wednesday made their views clear: They are siding with Mr Powell.
Representative Maxine Waters, the Democratic chair of the House Financial Services Committee, asked Mr Powell what he would do if Mr Trump asked him to resign.
"Of course I would not do that," Mr Powell said and repeated that he fully intends to serve his four-year Fed chair term, which expires in February 2022. His term as a member of the Fed's Board of Governors will expire in January 2028.
The Federal Reserve Act says a US president can remove a Fed chair only "for cause" and any move to oust Mr Powell would likely touch off a legal fight.
Mr Patrick McHenry, the Financial Services panel's top Republican member and a supporter of Mr Trump's economic policies, was one of several lawmakers who gave Mr Powell credit for what Mr McHenry called his "proactive communications" with Congress.
Mr McHenry provided his own opening for Mr Powell to push back against Mr Trump's criticism.
Does public criticism enhance or impede the Fed's independence, Mr McHenry asked Mr Powell.
"Neither," Mr Powell responded, adding that emotion also plays no role in Fed decisions.
Mr Powell also spoke about his opposition to Facebook's plan to build a digital currency called Libra. He said it "cannot go forward" until serious concerns are addressed. - REUTERS