Breakingviews - Fed chief makes case for non-partisan high ground
Jay Powell remains the adult in the room. The Federal Reserve chair testified in the U.S. Senate on Tuesday alongside Treasury Secretary Steven Mnuchin in a hearing on Covid-19 relief measures. He stuck to his technocratic script. Remaining above the political fray is a...
Anna Szymanski3 Min ReadFederal Reserve Chairman Jerome Powell testifies before the Senate Banking Committee hearing on"The Quarterly CARES Act Report to Congress" on Capitol Hill in Washington, U.S., December 1, 2020. Susan Walsh/Pool via REUTERS
NEW YORK (Reuters Breakingviews) - Jay Powell remains the adult in the room. The Federal Reserve chair testified in the U.S. Senate on Tuesday alongside Treasury Secretary Steven Mnuchin in a hearing on Covid-19 relief measures. He stuck to his technocratic script. Remaining above the political fray is a tough but worthwhile goal.
America’s monetary and fiscal chiefs frequently agreed with one another, defusing what came over as a public disagreement just weeks ago over Mnuchin’s termination of lending programs set up during the pandemic and the return of around $450 billion to the Treasury. headtopics.com
Instead the posturing came from senators as the polarizing presidency of Donald Trump transitions to the administration of President-elect Joe Biden. Ohio Democrat Sherrod Brown said Mnuchin was trying to “sabotage our economy.” Tom Cotton, a Republican from Arkansas, said Democrats may want to use the returned cash as a “slush fund” for abortion providers, marijuana dispensaries and such.
Most agreed that additional fiscal help is necessary. A $908 billion bipartisan stimulus bill, released by a group of senators the same day, offers both sides reasons to compromise. But they haven’t so far managed that since passing the last round of federal help in March.
Powell reiterated that the economy would benefit from additional fiscal stimulus, but when senators tried to get him to agree about, say, how much funding U.S. states had received or the economic impact of forgiving student loans, he stuck to facts.Maintaining a non-partisan stance helps ensure investors view the central bank’s actions as in the best interest of the economy, not one party or political viewpoint. And Powell, nominated by Trump but also a regular target of critical presidential tweets, has managed to walk that line, setting himself up as a possible Biden nominee for another term.
But monetary and fiscal efforts to stimulate the economy necessarily overlap. With Washington already borrowing heavily and likely to spend far more countering Covid-19, calls for the Fed to keep interest rates at rock bottom to minimize the government’s debt-service costs will grow louder. headtopics.com
Some in Biden’s circle want the Fed to get more involved in addressing social inequities, too, not to mention a possible role in tackling climate change. Future chairs may find it harder to avoid being pulled into the scrum.BreakingviewsReuters Breakingviews is the world's leading source of agenda-setting financial insight. As the Reuters brand for financial commentary, we dissect the big business and economic stories as they break around the world every day. A global team of about 30 correspondents in New York, London, Hong Kong and other major cities provides expert analysis in real time.Read more: Reuters Top News »
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That is what he s/b doing trying to act as a MEDIATOR between the two sides DEMS & REPS, instead he's largely done NOTHING but side with the REPS. Yeah sure New ...? NON PARTISAN ...!!!? Hello WAKE UP SIR