Tuesday, December 11, 2018

Fed Chief Jerome Powell Goes Populist

Federal Reserve chairman Jerome Powell wants to make America’s central bank easier to understand and more open to the public.

In a departure from precedent, Powell began the press conference following the meeting of the Fed’s monetary conference with what he described as a “plain English” statement of the Fed’s view of the economy and its policy.

“The main takeaway is that economy is doing very well. Most people who want to find jobs are finding them. And unemployment and inflation are low,” Powell said.

Powell also announced another departure from precedent. Beginning in January, the Fed chair will hold a press conference after every meeting of the Federal Open Markets Committee. Until now, those have been held every other meeting.

“As chairman, I hope to foster a conversation about what the Fed is doing to foster a strong, resilient economy,” Powell said. “That will give us more opportunities to explain our actions and to answer your questions.”

Powell quickly pointed out that having more press conferences should not be interpreted as signaling anything about the direction of interest rates. In recent years, Fed watchers have correctly assumed that the Fed would only raise rates during meetings followed by a press conference.

Neither of Powell’s changes — the plain English mini-speech at the start of the press conference nor the doubling of the press conferences — was expected. It may be an indicator that Powell may make more of a mark on the Fed than many thought when President Donald Trump appointed the former Treasury official and investment banker to the central bank’s top job.

John Carney

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