Powell Rejects Any Linkage Between Renomination and Hawkish Tilt
(Bloomberg) -- Federal Reserve Chair Jerome Powell rejected the idea that he had held off last month on a hawkish policy tilt until President Joe Biden had nominated him for a second term at the helm of the central bank.
Powell said that, in the wake of the October consumer price report -- coming on top of strong readings on that month’s jobs figures and employment costs -- “I just came to the view over that weekend that we needed to speed up the taper, and we started working on that.”
“Honestly, it had nothing to do with that at all,” Powell said at Wednesday’s press briefing following the latest Fed policy decision.
He said he had made the conclusion that a faster pace of winding up the Fed’s asset-purchase program was warranted -- a decision announced Wednesday -- 10 days before Biden made his nomination announcement.
Powell pointed out that some of his fellow policy makers “were out talking about a faster taper -- and that doesn’t happen by accident.” He said that the October employment and consumer price indicators -- which both came in strongly -- had prompted him to conclude that the Fed needed to speed up the end of quantitative easing.
Fed Vice Chair Richard Clarida and Governor Christopher Waller publicly discussed faster tapering on Nov. 19, and St. Louis Fed President James Bullard had done so earlier that week.
“It’s a decision that was more than effectively in train, and to the point where people were talking about it publicly,” Powell said of the accelerated tapering. “It had absolutely nothing to do with it,” he said of Biden’s renomination announcement.
©2021 Bloomberg L.P.