Powell: The way we work will not be affected by Trump

Source: The PaperNews

Fed Chairman: The Fed's working methods will not be affected by Trump, and it has never sought a meeting with the president

In the early morning of May 8th, Beijing time, the Fed's latest interest rate decision maintained the target range of the federal funds rate at 4.25%-4.5%, in line with market expectations. Previously in March, the Fed also maintained the above interest rate unchanged. Last year, the Fed cut interest rates by 100 basis points in total.

In the subsequent press conference, Fed Chairman Powell said that US President Trump's request for the Fed to cut interest rates will not affect the Fed's working methods at all.

"We're always doing the same thing, using our tools to promote maximum employment and price stability... We're always considering only economic data, prospects, and the balance of risks, and that's all. That's all we have to consider."

Powell said he had never sought a meeting with any president and would never do so. "I've never had reason to ask for a meeting... I don't think the chairman of the Federal Reserve has the right to seek a meeting with the president."

In the past month, Trump has repeatedly called on Powell to cut interest rates and even publicly threatened to force Powell to step down. He later changed his words and said the Fed should lower interest rates, but he had no intention of firing Powell.

The Federal Reserve kept its policy unchanged as expected, emphasizing that "the risks of both unemployment and inflation have increased" (full text of the statement)

In the early morning of May 8th, Beijing time, the Federal Reserve's latest interest rate decision maintained the target range of the federal funds rate at 4.25%-4.5%, in line with market expectations. Previously in March, the Federal Reserve also kept the above interest rate unchanged. Last year, the Federal Reserve cut interest rates by 100 basis points in total.

The Federal Reserve said in its statement that although fluctuations in net exports affected the data, recent indicators showed that economic activity continued to expand steadily. Uncertainty about the economic outlook has further increased. The committee noted the two-sided risks facing its dual mission and judged that the risks of both unemployment and inflation have increased.

Compared with the March interest rate statement, this statement points out the impact of net export fluctuations on the data, and points out that the uncertainty of the economic outlook has "further" increased, while adding the statement that "the risks of rising unemployment and inflation have increased."

The statement said that when considering further adjustments to the magnitude and timing of the federal funds rate target range, the committee will carefully assess future data, changing prospects and risk balance. The committee will continue to reduce its holdings of U.S. Treasury bonds, agency bonds and agency mortgage-backed securities. The committee is firmly committed to supporting maximum employment and restoring inflation to the target of 2%.

This interest rate resolution was passed unanimously.

Below is the full text of the May statement compared with the March statement:

Although fluctuations in net exports have impacted the data(added this month),, recent indicators suggest that economic activity has continued to expand at a solid pace. The unemployment rate has stabilized at low levels in recent months, and labor market conditions remain favorable. Inflation has remained somewhat elevated.

The Committee seeks to achieve maximum employment and 2 percent inflation over the longer run.

Uncertainty about the economic outlook has further increased. The Committee notes the two-sided risks to its dual mandate and judges that the risks to both higher unemployment and higher inflation have increased (added this month). To support its goals, the Committee decided to maintain the target range for the federal funds rate at 4-1/2 to 4-1/2 percent. The Committee will carefully assess incoming data, the changing outlook, and the balance of risks as it considers further adjustments to the magnitude and timing of the target range for the federal funds rate. The Committee will continue to reduce its holdings of Treasury securities, agency bonds, and agency mortgage-backed securities. （Deleted March original text: Starting in April, the Committee will reduce the monthly redemption limit on U.S. Treasury securities from $25 billion to $5 billion to slow the pace of decline in its securities holdings. The Committee will maintain the $35 billion monthly redemption limit on agency bonds and agency mortgage-backed securities) . The Committee is firmly committed to supporting maximum employment and returning inflation to its 2% objective.

In assessing the appropriate monetary policy stance, the Committee will continue to monitor the implications of incoming economic data. If risks materialize that would impede achievement of the Committee's dual objectives, the Committee will be prepared to adjust the monetary policy stance as appropriate. The Committee's assessments will take into account a wide range of information, including labor market indicators, indicators of inflation pressures and inflation expectations, and data on financial and international developments.

Voters in favor include: FOMC Chairman (Fed Chairman) Jerome H. Powell (Chairman); Committee Vice Chairman (New York Fed Chairman) John C. Williams (Vice Chairman); (Fed Board Member) Michael S. Barr; (Fed Board Member) Michelle W. Bowman; (Boston Fed Chairman) Susan M. Collins; (Fed Board Member) Lisa D. Cook; (Chicago Fed Chairman) Austan D. Goolsbee; (Fed Board Member) Philip N. Jefferson; (Minneapolis Fed Chairman) Neel Kashkari(Newly added this month); (Fed Board Member) Adriana D. Kugler; (St. Louis Fed Chairman) Alberto G. Musalem;[Deleted original text in March: (Kansas City Fed President) Jeffrey R. Schmid]; (Federal Reserve Board member) Christopher J. Waller(New this month). (New this month: Neel Kashkari voted as an alternate member at this meeting.)