Post by ferris1248 on Jul 12, 2024 6:52:45 GMT -5
The responses from both sides can be predicted. 
Lawmakers from both parties made something abundantly clear this week to Jerome Powell: The Fed is likely to be criticized no matter what it decides to do at its last meeting before the November election.
The central bank chair indicated he is inching closer to interest rate cuts, and market watchers are now betting that will happen in mid-September following another favorable inflation reading Thursday from the Consumer Price Index. The Fed's Sept. 17-18 meeting is less than 7 weeks before election day.
What parties signaled this week is that they would criticize the central bank if this key September decision doesn't go their way.
If Powell and his colleagues choose to keep rates at a 23-year high, a growing chorus of Democratic critics calling for cuts may reach a crescendo. But if policymakers do indeed cut, Republicans from Donald Trump on down will be sure to cast the move as caving to election-year pressure.
"Gosh, you are under a lot of pressure from all sides," Rep. Young Kim, a California Republican, said Wednesday as Powell neared the home stretch in his two days of Congressional testimony across a wide array of issues.
Powell had to confront interest rate concerns coming from both sides of the aisle. From the left was Senate Banking chair Sherrod Brown, who told Powell Tuesday that "I’m concerned if the Fed waits too long it could underdo the progress we’ve made."
The Ohio Democrat, who is currently locked in a tight re-election campaign, said "workers have too much to lose if the Fed overshoots the inflation target and causes a completely unnecessary recession."
The pressure from the right was equally clear. House Financial Services chair Patrick McHenry, a top Republican, told Powell Wednesday that "you must not allow politics to cloud the Fed’s monetary policy."
Rep. Andy Barr, a Kentucky Republican, put an even finer point on it, telling reporters earlier this week that "I think a September rate cut will not be perceived as apolitical."
Powell’s response to the new wave of political pressure was to echo an independent, apolitical approach he has honed throughout 2024, emphasizing that the only criteria that matters to him is data on prices and jobs.
"Our political independence is critical to our ability to do our jobs and to sustain the faith of people across the political spectrum," he said Wednesday as he defended the central bank’s record of ignoring politics.
"Anything we do will be very well grounded," he added later. "It is just not appropriate for us to get into the business of thinking about election cycles at all."
"I think the Fed has a very good case to begin a gradual reduction in interest rates," said Claudia Sahm, a former Federal Reserve Board Economist, in a Yahoo Finance live appearance this week.
But the exact timing remains unclear with Powell facing, as Sahm put it, an economic landscape that was "unimaginable a year ago."
"This is my fourth presidential election at the Fed and I can tell you we come to work the next day and do our jobs," Powell said at another point.
That will literally be true. The Fed's November gathering is scheduled to kick off on the morning of November 6, just hours after the election voting sites close.
finance.yahoo.com/news/whatever-jay-powell-does-in-september-will-be-viewed-as-political-080028869.html
Lawmakers from both parties made something abundantly clear this week to Jerome Powell: The Fed is likely to be criticized no matter what it decides to do at its last meeting before the November election.
The central bank chair indicated he is inching closer to interest rate cuts, and market watchers are now betting that will happen in mid-September following another favorable inflation reading Thursday from the Consumer Price Index. The Fed's Sept. 17-18 meeting is less than 7 weeks before election day.
What parties signaled this week is that they would criticize the central bank if this key September decision doesn't go their way.
If Powell and his colleagues choose to keep rates at a 23-year high, a growing chorus of Democratic critics calling for cuts may reach a crescendo. But if policymakers do indeed cut, Republicans from Donald Trump on down will be sure to cast the move as caving to election-year pressure.
"Gosh, you are under a lot of pressure from all sides," Rep. Young Kim, a California Republican, said Wednesday as Powell neared the home stretch in his two days of Congressional testimony across a wide array of issues.
Powell had to confront interest rate concerns coming from both sides of the aisle. From the left was Senate Banking chair Sherrod Brown, who told Powell Tuesday that "I’m concerned if the Fed waits too long it could underdo the progress we’ve made."
The Ohio Democrat, who is currently locked in a tight re-election campaign, said "workers have too much to lose if the Fed overshoots the inflation target and causes a completely unnecessary recession."
The pressure from the right was equally clear. House Financial Services chair Patrick McHenry, a top Republican, told Powell Wednesday that "you must not allow politics to cloud the Fed’s monetary policy."
Rep. Andy Barr, a Kentucky Republican, put an even finer point on it, telling reporters earlier this week that "I think a September rate cut will not be perceived as apolitical."
Powell’s response to the new wave of political pressure was to echo an independent, apolitical approach he has honed throughout 2024, emphasizing that the only criteria that matters to him is data on prices and jobs.
"Our political independence is critical to our ability to do our jobs and to sustain the faith of people across the political spectrum," he said Wednesday as he defended the central bank’s record of ignoring politics.
"Anything we do will be very well grounded," he added later. "It is just not appropriate for us to get into the business of thinking about election cycles at all."
"I think the Fed has a very good case to begin a gradual reduction in interest rates," said Claudia Sahm, a former Federal Reserve Board Economist, in a Yahoo Finance live appearance this week.
But the exact timing remains unclear with Powell facing, as Sahm put it, an economic landscape that was "unimaginable a year ago."
"This is my fourth presidential election at the Fed and I can tell you we come to work the next day and do our jobs," Powell said at another point.
That will literally be true. The Fed's November gathering is scheduled to kick off on the morning of November 6, just hours after the election voting sites close.
finance.yahoo.com/news/whatever-jay-powell-does-in-september-will-be-viewed-as-political-080028869.html
