On Wednesday, the Chair of the US Federal Reserve (the Fed) Jerome Powell addressed the Stanford Business, Government, and Society Forum in his opening remarks for the event.
Here, he spoke about the current state of the American economy and the road ahead for monetary policy before, lastly, discussing the Fed’s policy independence.
“The Fed has been assigned two goals for monetary policy—maximum employment and stable prices. Our success in delivering on these goals matters a great deal to all Americans,” said Powell in describing the function of the US central bank.
He highlighted the rarity of an independence like the Fed's within the federal political infrastructure: Fed policymakers serve long terms that are not synchronized with election cycles, and their decisions can only be reversed through legislation.
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“In the case of the Fed, independence is essential to our ability to serve the public,” he said. “The record shows that independent central banks deliver better economic outcomes.”
Powell went on to elaborate that, “Transparency and accountability are fundamental for any government agency in a democracy but are especially important for one granted policy independence.”
Frequently, Powell stated—and this might be especially relevant in an election year—the Fed's policymakers are asked to declare positions on issues that, while related to the economy, fall outside the Fed's mandate, such as immigration policies or climate change.
“We are not, nor do we seek to be, climate policymakers,” the Chair asserted.
“Our analysis is free from any personal or political bias, in service to the public. We will not always get it right—no one does. But our decisions will always reflect our painstaking assessment of what is best for our economy in the medium and longer term—and nothing else.”