Jerome Powell's Congressional Testimony Shows His Style as Fed Chairman
(Bloomberg View) -- Jerome Powell is his own man.
That doesn’t just refer to whether he’ll stand up to the man who appointed him, Donald Trump, or to the fact that he’s the first Federal Reserve chairman in more than a decade without a Ph.D. in economics. (The latter isn’t necessarily a knock against him.)
It was his repeated personalization of views when testifying to the House Financial Services Committee this week that attracted some attention. The Fed being a creation of Congress, there’s normally a degree of decorum and some deference involved in appearances before legislators. So this personalization was a change, as my Bloomberg News colleague Jeanna Smialek noted.
Powell’s two immediate predecessors, Ben Bernanke and Janet Yellen, were very careful on the Hill to couch things in terms of “the committee,” meaning the interest-rate setting Federal Open Market Committee, or “the Fed.” They were frequently at pains to de-emphasize their personal views and emphasize the institution.
Powell certainly appeared very relaxed in his debut. Very little seemed to faze him. To be fair, questions from the House are rarely that taxing; things can get a bit more interesting in the Senate, where he heads later this week. Also in Powell’s favor: The FOMC won’t be publicly armed with fresh forecasts for growth and inflation until its March 20-21 conclave. Quite a bit has happened since forecasts were last presented in December.
Trump signed the huge corporate tax cut into law, for one. Then there were the market gyrations of mid-February and the increase in wages during January that sparked that market swoon. Lawmakers were bound to ask for an update.
What Powell said seemed fairly straightforward, though it did lead to speculation the central bank may increase interest rates four times this year rather than the three steps flagged in December. (I’m talking about the famous dot plot here.)
“My personal outlook for the economy has strengthened since December,” Powell said. “I wouldn’t want to prejudge that new set of projections, but we’ll be taking into account everything that has happened since December.”
So what? He’s the chairman, right? It’s easy to forget that one of the big reforms of the Bernanke years -- lost amid the drama of the financial crisis -- was the democratization of the FOMC. To her credit, Yellen continued that. Accompanying that glasnost was a panoply of new information, forecasts, goals and strategy declarations. Few people want to see that go away. As a general rule, more information is better than less.
It’s possible to overemphasize seemingly little things. In all, it was a polished performance. If opening-night nerves were there, Powell kept them hidden. Here’s hoping his aplomb reflects the confidence of the Fed, and it isn’t really all about him.
This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.
Daniel Moss writes and edits articles on economics for Bloomberg View. Previously he was executive editor of Bloomberg News for global economics, and has led teams in Asia, Europe and North America.
For more columns from Bloomberg View, visit http://www.bloomberg.com/view.
©2018 Bloomberg L.P.