The position of Federal Reserve Chairman (Fed) always carries with it a flood of criticism, but what Jerome Powell did not expect is that the sharpest came from who appointed him a year ago, President Donald Trump.
The almighty central bank of the country is the main monetary reference in the world, and whoever is in charge becomes in a certain way its global captain.
When Powell, 66, took office exactly one year ago, the main challenge was to continue with the gradual process of raising interest rates designed by his predecessor, Janet Yellen, to accompany the good performance of the national economy.
In 2018, the Fed raised the price of money four times, to the current range of between 2.25% and 2.50%.
This monetary adjustment took place at the same time as the huge fiscal stimulus launched by Trump as part of a tax cut for companies and, to a lesser extent, for workers.
The projection of the Fed is that the country’s economy closed last year with a more than healthy growth rate of 3%.
Added to a minimum unemployment of almost half a century ago, since in January it stood at 4%; and controlled inflationary pressures, with an annual rate of 2% around the central bank’s target, the economic outlook only caused envy among colleagues at other major central banks such as the euro zone or Japan.
However, criticism began to rise from the most unsuspected place: the White House.
In another show of irreverence and bankruptcy with the tradition of Washington, Trump began to charge publicly against Powell.
In October, the president said the Fed was “out of control” because of its interest rate hike, something that, in his view, endangered the acceleration of the economy.
“The Fed has gone crazy (…) So far, I’m not at all happy with my choice (Jerome Powell),” he said.
The attacks left the markets and the political system of Washington speechless, given the usual distance adopted by the Executive regarding monetary policy.
The independence of central banks is considered one of the key elements of economic orthodoxy, as well as a guarantee of balance against political fluctuations.
Powell, for his part, avoided responding directly to Trump and stressed that the path of monetary policy is marked by available economic data, along with the double mandate given by Congress to promote full employment and price stability.
To celebrate the first anniversary, and perhaps to iron out harshness, this Tuesday Trump invited Powell and the vice president of the Fed, Richard Clarida, to an “informal dinner” at the White House, which was also attended by the Secretary of the Treasury, Steven Mnuchin .
“(Powell) did not discuss his expectations about monetary policy, except to emphasize that the path will depend completely on the economic information that is coming (…) and that decisions based exclusively on a careful, objective and non-political analysis will be made “, the central bank said in a statement at the end of the meeting.
The meeting came just after the Fed’s first meeting of the year, in which it decided to keep interest rates unchanged and pointed to a pause in the pace of monetary tightening.
“The argument for a rate hike has weakened,” Powell said at a news conference on January 30, referring to the global economic slowdown and the latest episodes of financial volatility.
On this occasion, Trump avoided offering comments and silence from his Twitter account can be understood as a sign of approval. (EFEUSA) .-