It’s been an exhausting week. But, if you are Jerome Powell, it was even more exhausting. By nature, a lawyer. By political affiliation a registered Republican. We are lucky to have a statesman of Powell’s ilk at the helms of the most influential central bank in the world.
Some U.S. Senators may have forgotten about Powell’s legacy. Not the national debt rate. More the controlling of inflation. Many questions aimed at the Chairman of the Board of Governors of the Federal Reserve were related to hypothetical situations where Elon Musk and ‘his cronies’ would be accessing servers and confidential files at the Federal Reserve.
Senator Elizabeth Warren was particularly worried at how Elon Musk had ‘killed’ the agency protecting Americans from bad banking. The Consumer Financial Protection Bureau (CFPB) was alledged to be looking at regulating X. But President Trump has defended the decision by explaining that the CFPB was being eliminated “because we’re trying to get rid of waste, fraud, and abuse.”
During the testimonial of Jerome Powell, he was asked by a Democratic Senator if he would step in and ensure that the CFPB was still able to help consumers going forward. He remained non-committal. Something he was able to do during numerous questioning sessions from various Senators.
What About U.S. Interest Rates?
Powell was complimentary about the increased productivity he had seen in the U.S. jobs market post-Covid. He was encouraged to see so many more women participating in the job market that has led the U.S. to reach the lowest unemployment level for many decades.
Another Senator was interested in how the U.S. was enforcing the Basel III regulations. But Powell gave a strong response by explaining that Basel III meant that all banks globally had a minimum level of liquidity they now needed that he was encouraged about.
An area that Powell did feel there was a need for intervention was the Enhanced Supplementary Leverage Ratio or ESLR.
“I think it’s time to move on eSLR,” Powell said. Adding that the Fed was in the process of updating it “a few years ago” but never followed through.
On inflation Powell still sees some way to go before things will become easier. It was 2.6% in December. Higher than the 2% target the Fed has. Productivity may be up as well as GDP growth. However, for the U.S. to see a light at the end of the tunnel when it comes to its enormous government debt, more time is needed. And more signs of productivity and wage growth. Wage growth needs to outpace inflation which it isn’t doing right now.
As to Elon Musk’s Department of Government Efficiency or DOGE? Powell seems completely unfazed. He already prefers to work from the office, and confided that he works from home regularly on the weekends. Not sure Musk can help him be much more efficient. Do you?
Author: Andy Samu
