July 11, 2019
In a testimony before the House Financial Services Committee on Wednesday, Federal Reserve Chairman Jerome Powell suggested the Federal Reserve would cut interest rates and said that he would not resign if asked by President Donald Trump to do so.
Powell cited heightened economic uncertainty from trade disputes, slowing global growth, and slowing global economic growth as reasons to lower interest rates.
The Federal Reserve has usually lowered interest rates to prevent a recession or whenever it saw potential risks of an economic slump.
Last year, the U.S. economy grew at a pace of almost 3%, with the Federal Reserve and most private forecasters seeing steady continued growth. The latest jobs report saw 224,000 jobs added in the month of June with unemployment remaining at a nearly-fifty-year low of 3.7% and President Trump committed to renewed trade talks with China.
“The issue really is more now on the business side where we see business confidence and business investment weakening a bit,” Powell said in his testimony. “Household confidence has remained high, but over time uncertainty can cause households to hold back as well.”
Addressing concerns that the Federal Reserve was buckling under pressure from President Trump to lower interest rates, Powell defended the integrity and independence of the central bank.
“Congress has given us an important degree of independence so that we can effectively pursue our statutory goals based on objective analysis and data,” Powell said at the start of his testimony.
Recent reports revealed that President Trump had grown frustrated with Powell and was considering firing him, though it’s uncertain if the president has the legal authority to do so. Powell has insisted that within the law, he will be allowed to serve the full four-year term as Federal Reserve Chair and said that he would not resign if President Trump asked him to do so.
House Financial Services Committee Chair Representative Maxine Waters (D-Ca.) pressed Powell to provide a clear answer on the matter.
“Mr. Chairman, if you got a call from the president today or tomorrow, and he said I’m firing you, pack up, it’s time to go, what would you do?”
“Well, of course I would not do that,” Powell answered.
“I can’t hear you,” Waters said.
“The answer would be ‘no,'” Powell said.
“Do you believe the president doesn’t have the authority?” asked Waters.
“What I have said is the law gives me a four-year term and I fully intend to serve it.”
– MK. II