Congress has granted the nation’s central bank “significant protections” from short-term political pressures – and the bank, in return, owes the public clear explanations about what, and why, it does what it does, the chair of the agency said Wednesday.
In introducing the second-to-last “Fed Listens” program, held in Kansas City, Mo., Federal Reserve Board Chair Jerome H. (“Jay”) Powell said it is good for an organization (like the Fed) to “take a step back and ask if it could be doing its job more effectively.” The “Fed Listens” programs are a series of 12 meetings around the country with the public to obtain feedback on the agency’s policy (including interest-rate setting) and communications.
“But we must pose that question not just to ourselves,” Powell said. “Because Congress has granted the Federal Reserve significant protections from short-term political pressures, we have an obligation to clearly explain what we are doing and why. And we have an obligation to actively engage the people we serve so that they and their elected representatives can hold us accountable.”
The Fed, and Powell in particular, has borne the brunt of withering criticism from President Donald Trump over its interest-rate policies. Powell has responded repeatedly that the Fed is “strictly non political” and that the central bank is doing its best to “serve all Americans with our tools. We understand we have an important role; we desire no role on political issues.”
As recently as Monday, in introducing a documentary about one of his predecessors as Federal Reserve Board chair (Marriner Eccles), Powell pointed to a quotation inscribed on a plaque at the Fed building named for Eccles in Washington, D.C.: “’The management of the central bank must be absolutely free from the dangers of control by politics and by private interests, singly or combined.’”
In other comments, Powell noted that one more “Fed Listens” session remains this year (making a total of 12), to be held later this month in Chicago. He said the Fed Board plans to “publicly report our conclusions during the first half of next year” about what it learned during the series.