Powell: The way of working will not be influenced by Trump

Source: The Paper

Federal Reserve Chairman: The way the Federal Reserve operates will not be influenced by Trump, and has never sought to meet with the President.

At 2:00 AM Beijing time on May 8, the Federal Reserve's latest interest rate decision kept the target range for the federal funds rate unchanged at 4.25%-4.5%, in line with market expectations. In March, the Federal Reserve also kept the aforementioned rate unchanged, and last year, the Federal Reserve cumulatively cut interest rates by 100 basis points.

At the press conference that followed, Fed Chairman Jerome Powell said that US President Donald Trump's request for the Fed to cut interest rates would not affect the way the Fed works at all.

"We always do the same thing, using tools to promote maximum employment and price stability... We will always only consider economic data, prospects, and risk balance, and nothing more. That is all we need to consider."

Powell stated that he has never sought to meet with any president, nor will he ever do so, "I have never had a reason to request a meeting... I believe the chairman of the Federal Reserve has no authority to seek a meeting with the president."

In the past month, Trump has repeatedly called on Powell to lower interest rates, even publicly threatening to remove Powell from office, only to later change his tune and say that the Federal Reserve should lower interest rates, but he has no intention of firing Powell.

The Federal Reserve remains on hold as expected, emphasizing that "the risks of rising unemployment and inflation have both increased" (full statement)

On May 8th at midnight Beijing time, the Federal Reserve's latest monetary policy decision kept the target range for the federal funds rate unchanged at 4.25%-4.5%, in line with market expectations. In March, the Federal Reserve also kept the aforementioned rate unchanged, and last year, the Federal Reserve cut rates by a total of 100 basis points.

The Federal Reserve stated in its announcement that despite the fluctuations in net exports affecting the data, recent indicators suggest that economic activity continues to expand steadily. Uncertainty regarding the economic outlook has further increased. The committee noted the dual risks faced by its dual mandate and assessed that the risks of rising unemployment and inflation have both increased.

Compared to the March interest rate statement, this statement clarifies the impact of fluctuations in net exports on the data and notes that the uncertainty regarding the economic outlook has "further" increased, while adding that the risks of both rising unemployment and inflation have also increased.

The statement indicates that the committee will carefully assess future data, evolving outlooks, and risk balances when considering further adjustments to the target range for the federal funds rate in terms of magnitude and timing. The committee will continue to reduce its holdings of U.S. Treasuries, agency bonds, and agency mortgage-backed securities. The committee is firmly committed to supporting maximum employment and restoring inflation to the 2% target.

The monetary policy decision was passed unanimously.

The following is a comparison of the full statement from May and the statement from March:

Despite the fluctuations in net exports affecting the data (new this month), recent indicators suggest that economic activity continues to expand steadily. In recent months, the unemployment rate has remained at a low level, and the labor market conditions remain strong. Inflation has maintained a certain degree of high levels.

The committee aims to achieve maximum employment and a 2% inflation target in the long run. The uncertainty surrounding the economic outlook has further increased. The committee notes that the dual risks faced by its dual mandate have risen, and assesses that the risks of both unemployment and inflation rising have increased.

To support its objectives, the committee decided to maintain the target range for the federal funds rate at 4.25% to 4.5%. In considering further adjustments to the magnitude and timing of the federal funds rate target range, the committee will carefully assess future data, evolving prospects, and risk balance. The committee will continue to reduce its holdings of U.S. Treasury securities, agency bonds, and agency mortgage-backed securities. (Remove original text from March: Starting in April, the committee will lower the monthly redemption cap for U.S. Treasuries from $25 billion to $5 billion to slow the pace of its securities holdings decline. The committee will maintain the monthly redemption cap of $35 billion for agency bonds and agency mortgage-backed securities.) The committee is firmly committed to supporting maximum employment and restoring inflation to the 2% target.

In assessing the appropriate monetary policy stance, the committee will continue to monitor the impact of future economic data. If the occurrence of risks hinders the achievement of the committee's dual objectives, the committee will be prepared to adjust the appropriate monetary policy stance. The committee's assessment will take into account a wide range of information, including labor market indicators, inflation pressures and inflation expectations indicators, as well as data on financial and international developments.

The supporters of the vote include: FOMC Chairman Jerome H. Powell; Vice Chairman John C. Williams; Federal Reserve Governor Michael S. Barr; Federal Reserve Governor Michelle W. Bowman; Boston Fed President Susan M. Collins; Federal Reserve Governor Lisa D. Cook; Chicago Fed President Austan D. Goolsbee; ( Federal Reserve Governor Philip N. Jefferson; Minneapolis Fed President Neel Kashkari* (new this month); Federal Reserve Governor Adriana D. Kugler; St. Louis Fed President Alberto G. Musalem; [Remove March original text: (Kansas City Fed President) Jeffrey R. Schmid]; Federal Reserve Governor Christopher J. Waller (new this month)*. * (New this month: Neel Kashkari voted as a member of the committee in this meeting.) *