FRB chairman pledges to continue resilience in financial system, communicate monetary policy strategy ‘clearly, transparently’

Federal Reserve Board Chairman Jay Powell (center) joins panel at IMF conference in Zurich, Tuesday.

The Federal Reserve will continue to build resilience in the domestic financial system and support efforts to do the same in financial systems around the globe, the central bank’s board chairman said Tuesday.

Addressing a conference in Zurich, Switzerland, sponsored by the International Monetary Fund and Swiss National Bank, Federal Reserve Board Chairman Jerome H. “Jay” Powell also said that communicating monetary policy strategy clearly and transparently will be the aim of his agency to “help align expectations and avoid market disruptions” around the globe.

Most of Powell’s remarks to the conference (the Eighth High-Level Conference on the International Monetary System) focused on the role of U.S. monetary policy in driving global financial conditions and capital flows.

To that end, Powell told the gathering that the role of U.S. monetary policy is often exaggerated. “And while financial globalization does pose some challenges for monetary policy, efforts to build stronger and more transparent policy frameworks and a more resilient financial system can reduce the adverse consequences of external shocks,” he said.

He said the influence of U.S. monetary policy on global financial conditions should not be overstated. “The Federal Reserve is not the only central bank whose actions affect global financial markets. In fact, the United States is the recipient as well as the originator of monetary policy spillovers,” he said.

In any event, Powell concluded, the Fed will continue to foster financial stability and economic growth as normalization of the global economy proceeds.

Speech by Chairman Powell on monetary policy influences on global financial conditions and international capital flows