Wallet emphasizes monetary policy independence, reiterates commitment to 2% inflation target

Federal Reserve Chairman Jerome Powell emphasized his commitment to not providing forward guidance on interest rates during a hearing on Tuesday, with his testimony barely touching on rate policy. Powell stated that the Fed is firmly committed to maintaining price stability and pushing inflation back down to its 2% target, while stressing that the Fed possesses the policy tools needed to achieve this goal. He said: “The more we focus on our own responsibilities, the further we stay away from politics.” Powell also noted that the Fed will reassess its inflation framework to gain a deeper understanding of the factors driving inflation and the measures that can be taken to address it.

When discussing the newly established working groups at the Fed, Powell indicated that these groups are still in the research and exploration phase. He pointed out that relevant discussions will first take place among the 19 policymakers, with the entire process remaining open and transparent, and research findings and policy ideas will be shared with the public on a regular basis.

On balance sheet policy, Powell stressed that the balance sheet is part of monetary policy, not merely a matter of financial market operations. Any adjustments to balance sheet policy will be fully communicated, explained, and accompanied by sufficient preparation time for the markets well in advance. When asked how he would respond if former President Trump attempted to interfere with Fed policy, Powell responded that he would continue to fulfill his duties and uphold independent monetary policy-making. He stated that the Fed has already demonstrated its commitment to policy independence and institutional reform. (Jinshi)