Powell Suggests Additional Tightening, Emphasizes "Fed's Political Independence Is Important"

[Asia Economy New York=Special Correspondent Joselgina] Jerome Powell, chairman of the U.S. central bank, the Federal Reserve (Fed), emphasized once again the 'independence of the central bank' on the 10th (local time), stating that unpopular short-term interest rate hikes are inevitable to stabilize soaring inflation.

Powell attended a symposium hosted by Sweden's central bank, Riksbank, and said, "Price stability is the foundation of a healthy economy and will provide countless benefits to the public over time."

[Image source=AP Yonhap News]

He pointed out that when inflation is high, restoring price stability may require "unpopular short-term measures such as slowing the economy through interest rate hikes." He emphasized that the Fed's institutional framework, which allows it to set interest rates without direct political control from Congress or the White House, "enables these necessary actions to be taken without considering political factors."

This was a public distancing from the political pressure raised by some in the political sphere regarding the Fed's rapid interest rate hikes. Powell said, "The Fed's monetary policy independence is an important institutional device," and added, "That independence must be continuously secured." He also mentioned, "Monetary policy independence has the advantage of protecting monetary policy from short-term political considerations."

These remarks can also be interpreted as reaffirming that the Fed still prioritizes price stability even amid growing concerns about a recession. It also implies that if inflation remains high this year, the Fed will continue its tightening stance regardless of whether a recession occurs.

Along with this, Powell dismissed calls from some quarters that the Fed should take action on climate change. He stated, "Without explicit legislative action from Congress, it is inappropriate to use monetary policy to address climate change," and confirmed, "We are not climate policymakers and will not be in the future."

This content was produced with the assistance of AI translation services.