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Comment: Powell statement on meeting with President Trump and Treasury Secretary Mnuchin

It is unusual for a Fed Chair to issue a statement following what should be a routine meeting between a President and/or Treasury Secretary.  However, in light of President Trump’s repeated and highly public criticisms of Federal Reserve monetary policy in general and its Chair Jerome Powell specifically, it appears the Fed felt the necessity to issue a statement on Monday outlining the points under discussion.

It said, “At the President’s invitation, Chair Powell met with the President and the Treasury Secretary Monday morning at the White House to discuss the economy, growth, employment and inflation. Chair Powell’s comments were consistent with his remarks at his congressional hearings last week. He did not discuss his expectations for monetary policy, except to stress that the path of policy will depend entirely on incoming information that bears on the outlook for the economy.”

By extension, it is a defense of the independence of the central bank. The statement continued, “Finally, Chair Powell said that he and his colleagues on the Federal Open Market Committee will set monetary policy, as required by law, to support maximum employment and stable prices and will make those decisions based solely on careful, objective and non-political analysis.”

A subsequent post from President Trump’s Twitter feed said, “Just finished a very good & cordial meeting at the White House with Jay Powell of the Federal Reserve. Everything was discused [sic] including interest rates, negative interest, low inflation, easing, Dollar strength & its effect on manufacturing, trade with China, E.U. & others, etc.”

It is impossible not to read the tweet without some cynicism given President Trump’s frequent harsh opinions regarding Powell and monetary policy.

Powell has faced an uphill battle in maintaining the credibility of the Fed’s independence as rhetorical political pressure has been applied. However, he has done so consistently and and without offering more than a boilerplate dodge of questions about the topic. Nonetheless, that he should have to resort to issuing a statement to ensure that his position was not later misrepresented speaks volumes about the treacherous waters he and other policymakers have to navigate.

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