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Jay Powell says that “independence and integrity are inseparable” in the wake of another attack from Donald Trump on the Federal Reserve chair.
The US president labelled Powell a “very incompetent guy” who “may be a dishonest guy”. His comments came days after Jeanine Pirro, the US attorney for the District of Columbia, said she would appeal a decision to quash two subpoenas issued by the Department of Justice in its criminal probe into Powell’s handling of the $2.5bn renovation of the Fed headquarters.
Powell has cast the investigation as part of the Trump administration’s attempt to stifle the Fed’s independence to set interest rates free from White House pressure.
He made no mention of Trump in a recorded speech released on Saturday when he accepted the Paul A. Volcker Public Integrity Award. But he said: “We need independence to do what is right, and we need integrity to use that independence wisely. Ultimately, each of us will want to look back at the arc of our lives and know that we did what was the right thing.”
Volcker, who chaired the Fed during the late 1970s and much of the 1980s, was instrumental in cementing the central bank’s inflation-fighting credentials, defying behind-the-scenes pressure from the White House to cut interest rates.
Powell told the American Society for Public Administration Annual Conference that Volcker’s “willingness to resist short-term pressures in the interest of achieving lasting price stability demonstrated the courage and long-term perspective that define principled public service”.
Powell and other Fed officials have faced repeated attacks over their reluctance to lower interest rates as swiftly as Trump has demanded.
The president attempted to fire Fed governor Lisa Cook over allegations of mortgage fraud. Cook has denied the allegations, for which she is yet to be charged, and remains in her role at the central bank as the Supreme Court reviews her case against the president.
The Fed cut interest rates by a quarter point three times last year amid signs of a weakening labour market, but last week held its benchmark federal funds target range at 3.5 to 3.75 per cent.
Fed officials suggested after their regular monetary policy meeting this week that any plans to cut borrowing costs are on hold until Trump’s war in Iran ends.
The war has pushed up US oil prices by more than 50 per cent, driving petrol and diesel costs to their highest levels in either of Trump’s two stints in the White House.
Powell is set to leave the Fed in May, but his likely successor Kevin Warsh’s confirmation has been blocked by Senate Republicans led by North Carolina’s Thom Tillis. They said they would not back Trump’s pick until Pirro drops her probe.
Should Warsh fail to be approved by mid-May, the Fed believes that Powell can remain as chair until a new head receives a majority in the Senate.
Powell said he had “no intention of leaving the Board until the investigation is well and truly over, with transparency and finality”, even if Warsh’s nomination was approved.
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