Federal Reserve Chairman Jerome Powell stressed the central bank's independence in a speech Tuesday that comes amid continued pressure from the White House to cut interest rates
He spoke during a meeting at the Council on Foreign Relations in New York that investors
His remarks mirrored those from last week's Federal Open Markets Committee meeting, and he stressed that politics is under review though he did not overtly tip that hand that rate cut is at hand. Markets are currently pricing in four quarter-point reductions by April 2020.
"From the beginning of the year, we were taking a patient stance towards assessing the need for any policy change," he said. "We now state that the Committee will closely monitor the implications of incoming information for economic outlook and will act as appropriate to sustain the expansion with a strong labor market and inflation close to its symmetric 2 percent objective."
However, he stressed that politics will not be a consideration as the Fed is "grappling" with the idea of a rate cut
"The Fed is insulated from short-term political pressure ̵
Following the speech, Powell participates
He addressed the changing set of conditions since the Fed met in early May and noted that trade pressures and further downward revisions in global growth prospects have caused a rethink of politics.
"What has happened has changed since May 1, significantly," he said. Donald Trump has pressured Powell and his colleagues to loosen policy, saying lower rates would add a boost to an economy and stock market that grew strongly during his time in the Oval Office. Economists, however, say the situation is more serious. A growing number on Wall Street has seen signs of a slowdown in the bond market that could turn into a recession over the next year or so
At its policy meeting last week, the FOMC chose not to adjust its target interest rate.
However, Powell has indicated that policy decisions will be based on a broad range of information
"We're looking at the overall situation and wanting to see more, frankly," he said. "I think it's important not to overreact in the short term to things that happen to be temporary or temporary."
Important to sustain the expansion
Speaking on the economy, Powell reiterated that inflation continues to run below Fed's 2% objective. He also said the risks have grown to the Fed's outlook and that a belief in May that rates should hold steady has come into question
"The crosscurrents have reemerged, with apparent progress on trade turning to greater uncertainty and with incoming data raising renewed concerns about the strength of the global economy."
The prepared remarks did not address monetary policy, though Powell said the recent Fed forum in Chicago has shown a stronger job market. The Chicago event was part of an ongoing effort by central bankers to gather input on how well they are using policy to implement their goals and what to do in the future
"What we heard, loud and clear, was that today's tight labor markets mean that the benefits of this long recovery are now reaching these communities to a degree that has not been felt for many years," said Powell.
"We've heard that many people who, in the past, have struggled to stay in the workforce are now getting the opportunity to add new and better chapters to their life stories."
The unemployment rate is at a 50-year low of 3.6%, though inflation, the other part of the Fed's dual mandate, has consistently missed the target goal.