WASHINGTON: Newly-installed US Federal Reserve chief Jerome Powell pledged on Tuesday to preserve the key gains made in banking regulation since the global financial crisis and continue gradual interest rate increases.
Powell, who took over as Fed chair February 5, just as Wall Street took a vertiginous dive, also said the central bank would continue to reduce its bond holdings which reached more than $4.5 trillion.
“We are in the process of gradually normalising both interest rate policy and our balance sheet with a view to extending the recovery and sustaining the pursuit of our objectives,” Powell said in remarks at a ceremonial swearing in event.
He officially took over the helm of the Fed last week, replacing Janet Yellen, the only woman ever to lead the central bank in its 100-year history.
He credited Yellen and her predecessor Ben Bernanke for conducting monetary policy in a way to support the recovery and employment while making the financial system “incomparably stronger and safer.” Powell had been widely seen as more amendable to the President Donald Trump’s deregulation agenda, but the Fed chief reiterated that he favored striking a balance between keen oversight and overregulation, while preventing a buildup of new risks.
The central bank will “preserve the essential gains in financial regulation while seeking to ensure that our policies are as efficient as possible,” he said, adding that, “We will remain alert to any developing risks to financial stability.”
Fed policymakers late next month are widely expected to adopt their first interest rate hike of 2018, aiming to keep ahead of an anticipated rise in inflation this year.
It will be the first monetary policy meeting led by Powell, who is not an economist but has been on the Fed board since 2012, and he will hold his first press conference after the decision is announced.
Published in Dawn, February 14th, 2018
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