Striking Statements from Fed Chair Powell
U.S. Federal Reserve Chairman Jerome Powell spoke at the New York Times DealBook Summit held in New York on Wednesday. Responding to criticisms from President-elect Donald Trump, Powell expressed that he partially agrees with Trump's comment that being Fed Chairman is the best government job. During the summit, Powell emphasized that this role is a great honor and extends far beyond a one-time engagement, especially after Trump's sarcastic remarks regarding the job's simplicity. He underscored the importance of working at the central bank and stated that they view their responsibilities as sacred.
Powell also rejected Trump's claim that the Fed Chairman works once a month. He indicated that such positions require ongoing commitment and attention, reminding everyone of the challenges and responsibilities associated with jobs at the central bank.
Will the Fed maintain its independence during Trump's presidency? Despite Trump's campaign desire to intervene in the Fed's interest rate policies, Powell explained that it is possible to maintain the Fed's independence. He highlighted that the Fed's primary policies are in the best interest of the American people and stated that they would not be influenced by any political party. Despite previous disagreements with Trump, he stressed that the Fed would not compromise its independent structure.
In this context, Powell noted that the president does not have the authority to make direct changes to the Fed. In response to Trump's past threat to dismiss Powell, he indicated that the request for him to step down as Fed Chairman is outside legal boundaries.
Emphasizing a robust economy, Powell stated that the U.S. economy is stronger than expected, which allows the Fed to be more cautious in its interest rate reduction policies. He mentioned that the 50 basis point interest rate cut in September, aimed at supporting the labor market, was validated by subsequent data revisions showing a stronger economy.
Powell added that while economic growth is performing better than expected, inflation is slightly higher than forecasts. This situation requires the Fed to be more cautious regarding interest rate cuts while adopting a neutral policy approach.
Regarding Bitcoin, when asked whether its value increase undermines confidence in the dollar and the Fed, Powell stated that Bitcoin is a closer competitor to gold. He noted that many people view Bitcoin as a speculative asset and that it has not been widely adopted for payments or as a store of value. Powell emphasized that Bitcoin competes more with gold than with the dollar due to its volatility, asserting that it does not pose a direct threat to the current economic system.
These statements resonated in the cryptocurrency market, contributing to Bitcoin reaching a new record level near $104,000.
As for relations with the new U.S. administration, Powell indicated that he is not concerned about appointments to Fed leadership by the new administration. Regarding the potential reappointment of a Fed governor, he noted that he does not foresee such a "shadow" appointment. Powell expressed hope that institutional relations established with the new administration would align with past experiences and emphasized that the Fed would develop a strong professional relationship with every administration.