With fate of economy in his hands, Powell plays it low-key
In his first news conference as head of the world’s leading central bank, Jerome Powell avoided any professorial lectures.
His replies were briefer than his predecessors’. He said nothing of himself personally. He projected the air of an experienced technocrat, more steeped in finance than the complexities of economic theory.
If anyone was wondering how the new chairman of the Federal Reserve would differ from his two immediate predecessors, Janet Yellen and Ben Bernanke, Wednesday’s exchange with reporters offered some clues. Powell, unlike the longtime scholars Yellen and Bernanke, is not an economist. He hasn’t spent years delving into why economic growth leaves behind some segments of society.
The chairman instead came across as a consensus builder and only one member of a large committee of policymakers. And at times Wednesday, he appeared a bit nervous as he twisted open a water bottle or reached for his reading glasses.
His stated mission, he said, was to convey that Fed officials had made one policy change this week — and nothing more. The officials voted unanimously to raise the federal funds rate — what banks charge to lend to each other — by a modest quarter percentage point to a still-low range of 1.5 percent to 1.75 percent.
Yet reporters lobbed questions at Powell about tax cuts, a possible trade war, sluggish wage gains, the 2018 elections and the Fed’s seeming optimism about growth over the next two years without the threat of high inflation.
“We made one decision at this meeting,” Powell said, speaking a month after ascending to the Fed’s top job, chosen by President Donald Trump, after having served nearly six years as a Fed governor.
Unlike Bernanke or Yellen — who had to grapple with the 2008 financial crisis and its aftermath — Powell is presiding over a generally healthy U.S. and global economic picture. Accordingly, he was pressed about what Trump’s policies might mean for the trajectory of the economy and for the Fed.
Powell acknowledged that the president’s policies came up in discussion as Fed officials and the leaders of its regional banks met Tuesday and Wednesday. They had discussed how the tariffs introduced this month by Trump — with additional import taxes to potentially follow — could slow global trade. But the conversation didn’t go further than that risk, Powell said in response to multiple questions.
Growth acceleration
With the tax cuts in place, Fed officials did estimate that growth would accelerate slightly. The economy would likely expand 2.7 percent this year, more than the Fed’s prior forecast of 2.5 percent, according to a survey of projections released after the meeting. The median growth estimate for 2019 was 2.4 percent, up from 2.1 percent previously. This acceleration is far more tepid than the 3 percent growth being predicted by the Trump administration.