Transcripts For CSPAN Federal Reserve Chair Powell Testifies

CSPAN Federal Reserve Chair Powell Testifies On Monetary Policy July 13, 2024

Jerome powell was on capitol hill to update lawmakers on the economy and Monetary Policy. He spoke about the Economic Impact of the coronavirus, Cyber Threats in the Banking Sector and his influence in the Global Economy among other topics. This services hearing is three hours. I now recognize myself for four minutes to give an Opening Statement. Id like to welcome back chairman powell. As i discussed earlier, and at our last hearing with you, i remain very concerned about the president s efforts to interfere with the feds interMonetary Policy. A recent news story noted that trump has tweeted over 100 times about your nomination. Many of those tweets appear to be attempting to exercise pressure on the fed. Chairman powell, you and the fed board of governors must not be swayed by these aggressive tactics. Fedsolding the independence, you should also be mindful of public perception. Of course, trump continues to claim credit for Economic Growth that was put in motion by the policies of president obama, Congressional Democrats and the Federal Reserve. His irresponsible trade war and the gop tax scam have blown up the national debt, slowed our Economic Growth and harmed hard working american families. Trump continues to squander this inherited economy. Let me note that i am, however, disappointed in the feds efforts to deregulate megabanks, most recently by proposing the further rollback of the voelker rule. The doddfrank act made our Financial System safer, but it depends on agencies like the fed to potentially use the tools available to monitor and mitigate threats to our economy. The committee is carefully monitoring the developments in the repo market and the feds response. The fed should not arbitrarily reduce liquidity requirements in response to the repo market, disruption, as some on wall street have asked for. Instead the fed should make appropriate adjustments to promote a well functioning repo market while ensuring we have Strong Capital rules that cant be gamed through window dressing. A practice where banks alter their Balance Sheet to appear less risky and reduce their capital levels. In addition, the riskiness of various Financial Assets is increasing as Climate Change poses a more serious risk to our economy. The fed and other regulators should utilize Financial Stability tools under doddfrank such as incorporating climate related losses into supervisory stress tests of big banks to address this growing risk. I would also like to discuss recent developments involving the Community Reinvestment act. That is c. R. A. We have had a series of hearings on this issue, and i am very concerned about occ comptroller auditing, harmful proposals to turn c. R. A. Into the Community Disinvestment act and allow banks to escape their obligation to make responsible investments in the communities where they are chartered. I urge the fed to take a careful, deliberate approach to any changes to the implementation of the c. R. A. And to not join comptroller auditings misguide efforts. Governor braydens statement, and ill quote, its more important to get reforms done right than to do them quickly. Quote, unquote. It is absolutely correct. The occ and fdic should heed that advice as well and extend the Public Comment period as Community Banks, state regulators, community and civil Rights Groups as well as Committee Democrats have called for so that all stake holders have an opportunity to voice their concerns. I encourage the fed to keep a watchful eye on facebooks efforts to launch a crypto currency and digital wallet, which as we discussed at our last hearing, could compete with our own u. S. Dollar in light of the many risks facebook plans to create i and other democrats , have called on facebook to halt their plans until congress can examine the issues associated with the big tech i look forward to your testimony recognize thew Ranking Member of the committee. Mr. Mchenry. Chairman powell for appearing before us again. Under the Trump Administration, we have the best economy we have in decades. The numbers are irrefutable. The Unemployment Rate is essentially its lowest level in a half a century. This prosperity is being shared by all americans. The prime age labor force has reached 2. 2 million people. And not surprisingly, Consumer Confidence has increased dramatically since the month before the president s election. Every member of congress should celebrate these remarkable comes which has resulted which have resulted from Republican Leadership on probe growth policies like tax reform. But, our Economic Prosperity also depends on the Federal Reserve having a good policy. Chairman powell, i raise the concern that we have regulatory policy that is impinging on your capacity to make proper Monetary Policy and that is why i think it is important that you have a regulatory review of the limitations those regulations can put on your broader Monetary Policy decisions. That includes Systemic Risk concerns i have raised as well as the open Market Operations, especially the open Market Operations and the repo market. I thank you for your prompt response but i am not sure there has been a satisfactory answer to what caused the market spike in the first place. I have also voiced my concerns with the transition from the libor reference rate. I am still later, concerned consumers will be impacted by the transition. We stop have contracts written to the libor reference rate and given the recent volatility in the repo markets, i am concerned about the volatility in the consumer loans. At previous hearings, i have spoken about the Cyber Threats d on our Financial Institutions in china in particular. Yesterdays news about the wakeupdata breach is a call to every single policymaker that we need to take the threat of china and the Chinese Communist regime quite seriously. If we are not taking them seriously, have no fear. They are taking us seriously and now they also have our data. Of thislover of fax question of chinese policy is significant. Not just for Cyber Security but what we are seeing with the coronavirus and the destabilizing of facts it has on Global Health. I know you are not a Global Health expert but you can give us some sense of your techniques in response to these economic changes that are being driven out of the coronavirus challenge in china and the spillover effects it has to its neighbors like the supply chain in china. Neatly in may not fit the feds risk assessment. Cyber risks also do not fit neatly though the risks are real. Even though our data is limited coming out of china and we should reflect appropriately upon what we know and how we respond as an American Government and to the western world in response to these cyber and health risks. And the spillover effect it has on our economy. Again, thank you for being here and thank you for your openness. And for your approach to be in the language of the people then rather the language of the phds. Now recognize the chair on the subcommittee of national security, international development, and Monetary Policy, mr. Cleaver. Thank you, madam chair. I appreciate very much your willingness to travel around the country to do 14 of those and the onessions you did in kansas city at the fed building. I think it is a real opportunity for most people to sit down in a room and discuss economics with the chairman. Thank you very much. , people were sitting around the table with you and giving you a picture of in trying toes make it in the economy. People were more concerned about inflation. They believe it is like toothpaste. Once it gets out, it is hard to get back in. We are concerned about but also appreciative of your work and i look forward to getting more into this as we proceed with the hearing. Thank you, madam chair. I now recognize the subcommittee Ranking Member for one minute. You, madam chair and thank you chairman powell for being here to field our questions and provide your insights. I want to take a moment to thank the comments of the Ranking Member. I have read governor brainards very comprehensive views on the topic. Occs also discussed the point of view. As a former community banker, it is my view that we should ultimately have one approach to the cra. I have had 40 years of dealing with inconsistency in delivery of regulatory proposals. Ultimately, i believe it would be productive for us to have one approach to the regulation and modernize it for the Digital World that we live in today. I look forward to your presentation today and i yield back. I want to welcome to the committee our distinguished witness, jerome powell. Chairman of the Federal Reserve system. He has served since 2012 and as its chair since 2017. Esther powell has testified before the committee and i believe he does not need any further introduction. Without objection, your written testimony will be made part of the record. You are now recognized to present your oral testimony. You,man powell thank chairwoman waters and other members of the committee. I am pleased to present the semiannual Monetary Policy report. My colleagues and i strongly support the goals of maximum employment and price stability at congress has set for Monetary Policy. Congress has given us a degree of independence to pursue these goals. With itependence brings an obligation to explain clearly how we pursue our goals. Today, i will review the current Economic Situation before turning to Monetary Policy. The economic expansion is well into its 11th year and it is the longest on record. Over the second half of last year, economic and pretty increased at a moderate pace and the labor market strengthened further. With the global headwinds that had intensified last summer. Inflation has been low and stable but has run below the percent objective. 200,000 pereraged month in the second half of last year and an additional 225,000 jobs were added in january. The pace of job gains has remained above that needed to provide jobs to new workers entering the job for us. Was 3. 6 loyment rate last month and has been near halfcentury lows for more than a year. Job openings remain plentiful. Employers are increasingly willing to hire workers with fewer skills and train them and as a result, the benefits of a strong labor market have become more widely shared. Those that work in low and middle Income Opportunities best communities are finding more opportunities. Across all racial and ethnic groups and levels of education. Wages have been rising. Rose at a moderate rate over the second half of last year. Growth in Consumer Spending moderated following earlier strong increases but the fundamental supporting Household Spending remains solid. Residential investment turned up in the second half. Business investment and exports slowed. Factors weighed on activities at the factories of the nation whos out but declined whose output declined. The february Monetary Policy report discussed the recent weakness in manufacturing. Some of the uncertainty around trade has diminished recently. We are closely monitoring the emergence of the coronavirus concerns inlead to china spilling over to the rest of the Global Economy. Inflation ramp below inflation ran below the fmoc objective. Based on the price index for personal consumption expenditures was 1. 6 . Core inflation excluding volatile food and Energy Prices was also 1. 6 percent. Over the next few months, we expect inflation to get closer to 2 as unusual low ratings from 2019 drop out of the 12 month calculation. The nation faces an important longer run challenges. Labor force participation by individuals in their prime working years is at its highest rate in more than a decade lower than remains most advanced economies and there are troubling labor market disparities across regions of the country. Addition, although it is encouraging that productivity growth, the main engine for raising wages and Living Standards has moved up recently. Finding ways to boost labor force anticipation and productivity growth would benefit americans and should remain a national priority. I will turn now to Monetary Policy. Over the second half of 2019, the fmoc shifted to a more accommodative stance of Monetary Policy to cushion the economy from weaker Global Growth and to return a faster rate of inflation. We lowered the federal funds target range at our july, september, and october meetings putting the current target range at 1. 5 . Meetings, withnt some uncertainties around trade diminishing and some signs that Global Growth may be stabilizing, the rate was left unchanged. The current stance of Monetary Policy will support continued Economic Growth, a strong labor market, and inflation returning to the 2 objective. As long as incoming information about the economy remains broadly consistent with this outlook, the current stance of monetary will like the remain appropriate. Policies are not on a preset course. Taking a longer view, there has been a decline over the past quarter century in the level of Interest Rates consistent with stable prices. This low Interest Rate environment they limit the ability of Central Banks to reduce policy Interest Rates on a to support the economy during a downturn. With this concern in mind, we have been conducting a review of our Monetary Policy strategy, tools, and munication practices. Public engagement is at the heart of this practice. Through our fed listen events, we have been hearing from representatives. The february monitoring policy report shares some of what we have learned. The insights we have gained from these events have informed our framework discussions. We will share our conclusions when we finish the review likely around the middle of this year. The current low Interest Rate environment also means it would be important for fiscal policy to help support the economy if it weekends. To assist in stabilizing the economy during a downturn. A more sustainable federal budget could also support the growth over the long term. Finally, i will briefly review our planned technical operations to Monetary Policy. The february Monetary Policy report provides details of our operations to date. In october, the fmoc announced a plan to provide treasury bills. These actions have been successful in providing an ample reserve. As our bill purchases continue to build reserves towards levels to maintain ample conditions, we intend to gradually transition away from repo policies. And we also intend to slow our purchases to a pace that will allow our Balance Sheet to grow in line with demands. All of these technical measures support the implementation of Monetary Policy. Toy are not intended represent a change in the stance of Monetary Policy. We stand ready to adjust the details of our technical operations as conditions warrant. Thank you. I look forward to a further discussion. Thank you. An issue of proposed rulemaking. The Federal Reserve did not join this proposal. Member boarded voted against the proposal describing it as a deeply misconceived proposal that would fundamentally undermine and we can the community. Aken theeea community. And brainard said given the reports, they are likely to set expectations for a few decades, it is more important to get the reforms done right than to do them quickly. That requires giving stakeholders sufficient time and analysis to provide meaningful feedback. Chairman powell, governor brainard also suggested in a speech last month that the Federal Reserve created a evaluations6000 looking at how variou

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