In remarks prepared for Tuesday’s Central Bank Symposium that Sweden hosted, Federal Reserve Chairman Jerome Powell had this to say, among other things:
Mr Powell said he believes the “benefits of independent monetary policy in the US context are well understood and broadly accepted.” He also said grants of independence to regulatory agencies should be “exceedingly rare, explicit, tightly circumscribed, and limited to those issues that clearly warrant protection from short-term political considerations.”
In exchange for such autonomy, Mr Powell said the Fed “should ‘stick to our knitting’ and not wander off” into addressing policy issues that aren’t directly linked to its mandate to keep inflation low and to support a strong job market.
“Without explicit congressional legislation, it would be inappropriate for us to use our monetary policy or supervisory tools to promote a greener economy or to achieve other climate-based goals,” he said. “We are not, and will not be, a ‘climate policy maker.'”
Does Powell mean these words? And if he does, can he enforce them? Hope springs eternal….