Fed Chair Warns President Biden “We will not be a climate policymaker”

Please consider Jerome Powell’s speech on “Central Bank Independence and the Mandate—Evolving Views“.

Key Quotes (Emphasis Mine)

• Central Bank Independence: “Price stability is the bedrock of a healthy economy and provides the public with immeasurable benefits over time. But restoring price stability when inflation is high can require measures that are not popular in the short term as we raise interest rates to slow the economy. The absence of direct political control over our decisions allows us to take these necessary measures without considering short-term political factors.”
• New Goals: “Taking on new goals, however worthy, without a clear statutory mandate would undermine the case for our independence.”
• Stick to Mandates: “It is essential that we stick to our statutory goals and authorities, and that we resist the temptation to broaden our scope to address other important social issues of the day.”
• Climate Change: “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. We are not, and will not be, a ‘climate policymaker.‘” 

Distinct and Welcome Message

Powell’s statements are a clear warning to President Biden and the progressive wing of the Democratic Party not to expect the Fed to tackle social memes of the day.

Not that I believe there should be a Fed, but since there is, that’s a welcome statement.

Powell and the Fed have their hands full with a deteriorating economy to get distracted with such nonsense. 

Well done, Mr. Powell!

Weakening Economy

The latest  jobs report was anemic and the ISM services PMI was an outright disaster.

• December Jobs: Employment Rises by 717,000 All of Them Part Time
• ISM Services Plunges 6.9 Points Into Contraction, Another Recession Warning
• Stock Market Cheers Weak Job Report, But Big Picture Still Looks Grim

With housing in the gutter and the rest of the economy sinking fast, Powell has his hands full and then some. 

This post originated on MishTalk.Com.

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