United States Federal Reserve Chairman Jerome Powell says the Fed's setting of interest rates based on evidence and economic conditions is under threat from political pressure and intimidation.
The US Department of Justice has served the Fed with grand jury subpoenas threatening a criminal indictment related to Powell's testimony before the US Senate Banking Committee last June, the Fed says.
In a statement and video Powell notes that testimony included discussion of a multi-year project to renovate Federal Reserve office buildings. Powell says, however, the "unprecedented action" should be seen in the broader context of the Trump administration's threats and ongoing pressure.
"This is about whether the Fed will be able to continue to set interest rates based on evidence and economic conditions—or whether instead monetary policy will be directed by political pressure or intimidation."
Powell's full statement is below.
Good evening.
On Friday, the Department of Justice served the Federal Reserve with grand jury subpoenas, threatening a criminal indictment related to my testimony before the Senate Banking Committee last June. That testimony concerned in part a multi-year project to renovate historic Federal Reserve office buildings.
I have deep respect for the rule of law and for accountability in our democracy. No one—certainly not the chair of the Federal Reserve—is above the law. But this unprecedented action should be seen in the broader context of the administration's threats and ongoing pressure.
This new threat is not about my testimony last June or about the renovation of the Federal Reserve buildings. It is not about Congress's oversight role; the Fed through testimony and other public disclosures made every effort to keep Congress informed about the renovation project. Those are pretexts. The threat of criminal charges is a consequence of the Federal Reserve setting interest rates based on our best assessment of what will serve the public, rather than following the preferences of the President.
This is about whether the Fed will be able to continue to set interest rates based on evidence and economic conditions—or whether instead monetary policy will be directed by political pressure or intimidation.
I have served at the Federal Reserve under four administrations, Republicans and Democrats alike. In every case, I have carried out my duties without political fear or favor, focused solely on our mandate of price stability and maximum employment. Public service sometimes requires standing firm in the face of threats. I will continue to do the job the Senate confirmed me to do, with integrity and a commitment to serving the American people.
Thank you.
And here's the video.
14 Comments
Like the fall of the Soviet Union and the communist bloc, are we looking at the fall of Western Keynesianism? If we were, the bankers and Ponzinomics promoters would be immediately fearful. But I think they would be overreacting.
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"...are we looking at the fall of Western Keynesianism?"
You think what we have experienced post GFC is Keynesianism?....it is the opposite.
Keynesianism is primarily an economic theory, but it can and often does function as part of a broader political ideology when adopted as a policy “package” or worldview.
Would you like to elaborate on how it's changed?
It hasnt changed ...it is apparent you have no understanding of Keynes' theorem of economics.
He was concerned with trade imbalance, currency valuation and private debt, consequently he advocated the use of fiscal policy (read taxation)...the antithesis of how the GFC was addressed.
(p.s. and Bancor...but the US overruled him, and so we are where we are.
Keynesian economics as a theoretical framework does not require central bank independence, and historically early Keynesian policy was compatible with strong Treasury control of monetary policy. However, modern “New Keynesian” macro and inflation‑targeting regimes have often been implemented through independent central banks, so in practice many Keynesian‑influenced policy frameworks have coexisted with, and sometimes endorsed, independence.
Many inflation‑targeting regimes, typically justified within New Keynesian frameworks, assume an independent central bank to enhance credibility and anchor inflation expectations, but this is a policy recommendation layered on top of the theory.
Very, very well said Mr Powell. If only DJ Trump had a tenth of your intelligence or integrity.
The most intelligent thing to do would be to retire and spend time with the grand kids - not staying on because you want to play a game of 'who has got the biggest ego with Donald Trump' - because you will lose that game. But it appears to be a game that he is intending on playing. Which in my opnion, at 72 and financially well off, is a foolish thing to do (not an intelligent thing).
Walk away and let somebody else deal with Trump and spend your very limited remaining years (remember he is an old man at 72!) on earth in peace - not playing ego games.
Well well, seems the president is being open about Venezuela for the oil, and Powell open and honest about the influence of the president. How long since we have seen this level of honesty in US politics?
When will all these old dudes in their 70's with too much money get past their egos and retire?
Powell is 72 and loaded....what is he trying to achieve by staying on as the leader of the Fed?
I can understand people still being involved in politics when > 70...(just...) but being the guy that sets interest rates in your 70s!!! WTF...retire and play some golf man and spend time with the grand kids.
Its not like Powell is irreplaceable and that if he leaves the world is going to end (I mean we've already witnessed the financial instability that happens when hes in the job...so what could be worse than the inflation misread of recent times? Is somebody going to be worse than him at mis identifying transitory vs non transitory inflation...probably not!!) - the only way that I can reason why he has stayed is political - I mean why else would you put up with the crap he is dealing with, just in order to be the guy at the head of the Fed when financially you don't need the job? What is he afraid of if he retires?
Powell made his moolah at Carlyle Group and Severn Capital Partners. He has long been interested in economic policy and institutional design, dating back to his move from Dillon Read into the Treasury in 1990 to work on debt management, bank failures, and market regulation.
The same person criticising the expense of the Fed offices renovations is himself blowing $750m on a pretentious ballroom no one wants. Text book hypocrisy.
Trump’s new White House ballroom is being funded primarily by private donors and Trump himself, not by direct taxpayer appropriations.
As it ever was …,
Is this basically the same thing that Orr was saying before he was moved on?
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