Federal Reserve Chair Jerome Powell offered a gloomy outlook for the U.S. economy while speaking at the Economic Club of Chicago on Wednesday and pointed to President Donald Trump’s tariffs as both unprecedented and very likely to hurt economic growth and cause higher inflation.
After his remarks, Powell was asked by moderator Prof. Raghuram Rajan if he had any concern about the independence of his job.
“Let me turn to Fed independence. You’ve reiterated that you intend to stay in office until the end of your term. And that certainly reassured many in financial markets. What are the levers the government or the legislature have to pressure the Fed? And should one worry about threats to the Fed’s independence once you’re gone?” Rajan asked.
“So our independence is a matter of law. Congress has, in our statute, we’re not removable except for cause. We serve very long terms, seemingly endless terms. So it’s protected in the law. So you know, Congress could change that law, but I don’t think there’s any danger of that,” Powell replied, adding:
Fed independence has pretty broad support across both political parties and in both sides of the hill. So I think that’s not a problem. There’s a Supreme Court case, people will have read probably in today’s Journal, at which the Supreme Court may decide whether independent agencies generally, whether their authorizing laws, can contain a provision that prevents the president from firing members of a commission other than for cause.
And that’s a case that people are talking about a lot. I don’t think that decision will apply to the Fed, but I don’t know. It’s a situation that we’re monitoring carefully. Generally speaking, Fed independence is very widely understood and supported in Washington, in Congress, where it really matters. And the point is we can make our decisions, and we will only make our decisions based on our best thinking, based on our best analysis of the data about what is the way to serve to achieve our dual mandate goals as we can to best serve the American people.
“That’s the only thing we’re ever going to do. We’re never going to be influenced by any political pressure. People can say whatever they want. That’s fine. That’s not a problem. But we will do what we do. Strictly without consideration of political or any other extraneous factors,” Powell said to loud applause in the room.
Powell has previously vowed not to leave his role, even if fired by Trump, who has become a harsh critic of his, despite initially appointing him.
Watch the clip above.
