Federal Reserve Chairman Jerome Powell met President Donald Trump at the White House for dinner Monday to discuss recent economic developments and the outlook, but the central bank said the Fed chief did not share his expectations for monetary policy.
Powell’s comments were “consistent with his remarks at his press conference of last week,” the Fed said in a statement. “He did not discuss his expectations for monetary policy, except to stress that the path of policy will depend entirely on incoming economic information and what that means for the outlook.”
Meetings between a president and Fed chief are rare but not unprecedented. This one, though, took place against a background of public criticism by Trump of Powell over Fed rate increases that culminated with Bloomberg News reporting Dec. 21 that Trump had discussed firing the man he picked to lead the central bank. That direct threat to Fed independence — an article of faith among investors in U.S. assets, contributed to already steep stock-market losses that turned the month into the worst for U.S. equities since the Great Depression.
The dinner follows several months of almost unprecedented criticism by the president of the man he selected to run the Fed, breaking a decades-long tradition of the White House avoiding public comment on monetary policy out of respect for central bank independence. Trump showed no such qualms. Beginning in July, he publicly complained that Powell and his colleagues were raising rates too quickly and threatening the U.S. economic expansion. That ire peaked following the Fed’s Dec. 19 decision to raise rates for the fourth time in 2018.
Minutes from the December meeting revealed that officials were indeed aware of downside risks, and at their January meeting they backed off their forward guidance which had called for “further gradual increases.” Instead, they said the policy committee will “be patient as it determines what future adjustments to the target range” were needed, a signal that rates could go higher or lower if necessary. They left rates on hold and adopted a more flexible approach to balance sheet runoff, which they left unchanged for now.
— With assistance by Christopher Condon
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