If there’s one thing the chairman of the Federal Reserve Board wants the public to know, it’s that the central bank’s actions – and the policy decisions made by the board and carried out by the staff – are, in all ways, non-political.
That message came through loud and clear on Wednesday evening as Chairman Jerome H. (“Jay”) Powell led an hour-long “town hall” with teachers participating both in Washington and across the nation via video link-up.
The purpose of the event was clearly to provide some transparency about the central bank and its operations – in this case, to secondary- and elementary school educators, many of them focusing on economics. The educators posed questions to the Fed chairman for the majority of the 60-minute program.
But as the question-and-answer session started, it was clear that Powell had something on this mind: articulating and delineating the “non-political” nature of the Fed and its actions. (See video at bottom for full remarks.)
In a nearly five-minute response to the first teacher question posed to him – asking “what is it that you do at the Fed?” – Powell said at least five times that the Fed acts in a “non-political” way (or a variation of that phrase) in carrying out its actions to achieve its dual mandate of price stability and full employment.
In asserting that the Fed works in a “non-political” way, Powell noted the central bank has “precious independence from political concerns” and that it does things “on a non-political basis.” He also pointed out that the board’s governors are “directed to carry out our work in a non-political way.”
He also said that the Fed has accountability to the public, as the other side of its role in being non-political. “Our accountability runs through Congress,” Powell said, noting that he has frequent meetings with lawmakers.
One of the key roles of the board and the Fed at large, he said, is to “try earn and deserve the trust of the American people for our institution.”
He said that includes reassuring the public that the Fed is working on the public’s behalf – “in a non-political way” – to support the economy and to “use our tools to achieve maximum employment and stable prices. That’s really the essence of this job.”
Political influence over the Fed has, no doubt, been on the chairman’s mind over the last several months. He has faced withering criticism from President Donald Trump about the rate-setting Federal Open Market Committee (FOMC) and its actions to raise rates.
But, at its latest meeting, the Fed signaled that it would take a break from raising rates – signaling to some that Trump’s comments were causing the Fed – and Powell – to “cave.” In fact, a reporter posed that very question to Powell last week during a press conference following the latest meeting of the FOMC. Powell responded that the Federal Reserve cares only about “doing its job for the American people” and “never takes political considerations into account” as part of its work.
On Monday, following a dinner meeting with Trump, the Fed released a statement reiterating the Fed’s aversion to political persuasion over its actions. “Chair Powell said that he and his colleagues on the FOMC will set monetary policy in order to support maximum employment and stable prices and will make those decisions based solely on careful, objective and non-political analysis,” it stated.