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Federal Reserve Chairman Jerome Powell made a point of avoiding any comments with political implications at his press briefing on Wednesday, but President Donald Trump\u2019s nomination of Kevin Warsh on Friday to become the new Fed chief has put Powell\u2019s remarks in a different light.<\/p>\n
Warsh, a former Fed governor, has been critical of the central bank since he\u2019s been on Trump\u2019s short list to replace Powell. In recent months, he has called on the Fed to rethink its economic models and revamp as well as shrink its staff.<\/p>\n
\u201cWhat the Fed really needs to do is change their operating framework,\u201d Warsh said on Fox Business in October. \u201cThey need to change their models. They need to change a lot of personnel.\u201d<\/p>\n
When asked on Wednesday what advice Powell would give to his eventual successor, he suggested staying away from politics while also actively engaging with members of Congress, which is the institution that provides accountability and legitimacy to the Fed.<\/p>\n
And whether this was intentionally aimed at Warsh or not, Powell also delivered a robust defense of the Fed\u2019s personnel.<\/p>\n
\u201cIt\u2019s easy to criticize government institutions in so many ways,\u201d he said. \u201cI will tell whoever it is: You\u2019re about to meet the most qualified group of people you not only have ever worked with\u2014you will ever work with\u2014when you meet Fed staff. And not everybody\u2019s perfect, but there isn\u2019t a better cadre of professionals who are more dedicated to the public well-being than work at the Fed.\u201d<\/p>\n
Powell was also asked about whether the Fed\u2019s economic models focused too much on backward-looking data and don\u2019t incorporate game-changing developments like AI.<\/p>\n
He said such criticisms \u201cjust don\u2019t make sense,\u201d while acknowledging the structure of the macro economy is constantly changing.<\/p>\n
For example, the COVID pandemic was the first of its kind in a century, as was Trump\u2019s tariffs, creating great uncertainty. Powell also maintained that when it comes to technological developments that raise potential output, such as AI, \u201cwe\u2019re all over that.\u201d<\/p>\n
\u201cWe\u2019re very clear-eyed about the possibility that this higher productivity may persist, and also that it may not,\u201d Powell added. \u201cNo one\u2019s sitting here unaware of the possibility of higher productivity.\u201d<\/p>\n
The Fed is well aware better productivity means higher potential output, changing how to think about inflation, economic growth, and the labor market, he explained.<\/p>\n
\u201cThat\u2019s all in our models,\u201d Powell said. \u201cI mean if it\u2019s just a question of using better models, bring them on. Where are they? We\u2019ll take them. We certainly are in contact with anybody who does economic modeling, and we\u2019re always looking to do better.\u201d<\/p>\n
For now, Warsh still needs to be confirmed by the Senate to become the next Fed chair when Powell\u2019s term expires in May. And it\u2019s not certain if or when Warsh will get a hearing, as a key Republican senator has threatened to block any of Trump\u2019s Fed nominees until the Justice Department\u2019s criminal probe into Powell is resolved.<\/p>\n
Earlier this week, sources told CNBC<\/em> the Fed hasn\u2019t yet complied with grand jury subpoenas issued as part of DOJ\u2019s investigation. Powell declined to comment on it on Wednesday.<\/p>\n On Friday, Sen. Thom Tillis (R-N.C.) called Warsh a qualified candidate with a deep understanding of monetary policy, but vowed to continue blocking any nominees and said protecting the Fed\u2019s independence is non-negotiable.<\/p>\n \u201cMy position has not changed: I will oppose the confirmation of any Federal Reserve nominee, including for the position of Chairman, until the DOJ\u2019s inquiry into Chairman Powell is fully and transparently resolved,\u201d he posted on X.<\/p>\n<\/div>\n #Trump #named #Warsh #lead #Fed #Powell #respond #top #complaints<\/p>\n","protected":false},"excerpt":{"rendered":" Federal Reserve Chairman Jerom… <\/p>\n","protected":false},"author":1,"featured_media":17287,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":[],"categories":[2],"tags":[11158,901,1542,2187,11148,508,9262,1499,9070,187,599,3265],"_links":{"self":[{"href":"https:\/\/microvibenews.com\/index.php?rest_route=\/wp\/v2\/posts\/17286"}],"collection":[{"href":"https:\/\/microvibenews.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/microvibenews.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/microvibenews.com\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/microvibenews.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=17286"}],"version-history":[{"count":0,"href":"https:\/\/microvibenews.com\/index.php?rest_route=\/wp\/v2\/posts\/17286\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/microvibenews.com\/index.php?rest_route=\/wp\/v2\/media\/17287"}],"wp:attachment":[{"href":"https:\/\/microvibenews.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=17286"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/microvibenews.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=17286"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/microvibenews.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=17286"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}