U.S. Federal Reserve chairman Jerome Powell has been meeting with lawmakers at a faster clip than his two predecessors, a push that appears to be earning him allies as he navigates tricky monetary policy waters and vocal White House criticism.
In his first 10 months on the job, and beginning well before President Donald Trump began publicly chastising him and the U.S. central bank for raising interest rates, Powell logged more than 40 hours on the phone or in person with Republican and Democratic lawmakers, his calendars show.
That’s roughly equal to the combined total from Janet Yellen and Ben Bernanke through the same point during their tenures.
All told, Powell interacted with at least 72 members of Congress from February to November, two more than Yellen’s tally over her entire four-year term as Fed chief.
Published monthly with a lag, the calendars do not reflect what was discussed at any of Powell’s meetings, and neither Powell nor the Fed would disclose those details.
Still, interviews with key lawmakers who met Powell indicate he is accumulating goodwill on Capitol Hill to a far greater degree than Bernanke or Yellen managed. That backing could serve him well should Trump’s attacks intensify.
Trump nominated Powell in late 2017 to succeed Yellen, but he soured on the former lawyer and investment banker in 2018, blasting the Fed’s rate hikes as “loco” and “ridiculous” and accusing it of undercutting economic growth.
The attacks stoked fears the White House was trying to dictate policy to the Fed, concerns that were fuelled after it was reported Trump had privately discussed firing Powell. Trump later told reporters he would not try to oust the Fed chief.
Powell’s calendars show how far he has gone to “wear the carpets of Capitol Hill out,” as he promised to do when interviewed by Marketplace Radio in July. The goal, he said then, was to explain what the Fed was doing and to be responsive to the concerns of its overseers in Congress.
Moreover, the efforts differentiate him not only from past Fed leaders, but also from the chiefs of the European Central Bank and the Bank of Japan, who rarely meet one-on-one with lawmakers.
“IN THE LOOP”
Yellen and Bernanke faced intense public scrutiny from lawmakers for deploying unconventional tools like bond buying to lift the economy from the 2007-2009 recession, and it’s not clear more private meetings with U.S. lawmakers would have prevented or softened that criticism. Yellen and Bernanke declined Reuters’ requests for comment on this story.
Despite Trump’s criticism of the Fed, lawmakers who have met with Powell are backing the Fed chief, not the Republican president, on this one.
“I’ve urged the president to let the Fed do what they will do,” said Senator Patrick Toomey, a Pennsylvania Republican who sits on the Senate banking and finance committees, which oversee the Fed.
“If markets started to believe that the behaviour of the Fed were subject to political intimidation and pressure, that would be a very bad development for our economy, for our capital markets,” Toomey told Reuters in an interview.
Toomey also said he attended an informal dinner in November with other senators at which Powell discussed the central bank’s plan to rethink its strategy for achieving its dual mandates of full employment and price stability. Toomey called the effort “constructive” and “reasonable.”
Alabama’s Richard Shelby, another Republican on the Senate’s banking committee who sat down with Powell in September and also attended the November dinner, said the meetings typically include a briefing on policy and the economy.
“Chairman Powell is trying to keep the Congress in the loop as much as he can,” Shelby told Reuters in an interview. While noting that he was no fan of further rate hikes at this point, Shelby said, “the Federal Reserve was created to be independent of the president, of the Congress ... I don’t want to second-guess them.”
NO TRUMP MEETING YET
Trump is weighing nominees to fill two vacant spots on the Fed’s rate-setting committee, a potentially indirect way to influence monetary policy. The Fed, which hiked borrowing costs four times in 2018, will announce its latest rate decision on Wednesday after the end of a two-day policy meeting.
Powell has met with 19 of the 25 members of the Senate’s banking committee, which must approve Trump’s Fed nominees, most of them from July to November when the president was ramping up his public criticism of the Fed.
That timing is likely coincidental, as meetings are largely dictated by the congressional calendar and scheduled well ahead, but lawmakers meeting with Powell would not have missed Trump’s jabs.
“Chairman Powell deserves credit for resisting the president’s attacks and keeping monetary policy separate from politics,” said Virginia’s Mark Warner, a Democrat who sits on the Senate banking and finance committees. Warner had a 30-minute sit-down with Powell in August.
Powell has also met with half of the members of the U.S. House of Representatives Financial Services Committee, which also oversees the Fed.
Powell’s meetings, which began months before Trump began his public criticism of the Fed, were mostly half-hour affairs in lawmakers’ offices, but they also included a few five-minute phone calls and a dinner with 11 senators that lasted two-and-a-half hours.
Those meetings have added up fast.
Yellen crossed the 40-hour milestone in her 17th month at the helm of the Fed; Bernanke did it in his 16th. By this point as Fed chiefs, Yellen and Bernanke had both had two meetings with the presidents who appointed them.
Powell has yet to meet with Trump, though he has said he would be open to it.
As he nears the end of his first year leading the Fed, Powell faces some difficult choices: when to stop raising rates and shrinking the Fed’s vast holdings of U.S. Treasuries and mortgage-backed securities, and whether and how to revamp the Fed’s monetary policy approach.
Should an economic downturn materialize, he may even need to turn to the unconventional tools that Congress criticized his predecessors for using.
The lines of communication laid out with Congress may then pay even bigger dividends.
“From a strategic point of view, the Fed would have been better served if both Bernanke and Yellen had communicated more externally, with the public and Congress,” said former Minneapolis Fed President Narayana Kocherlakota, who now teaches at the University of Rochester in New York state. “Will this (Powell’s outreach) help with Congress’ appreciation of Fed independence? I think and hope so.”