US economy

Republican Senators Defy Trump’s Attacks to Support Powell

© Bloomberg. Jerome Powell Photographer: Andrew Harrer/Bloomberg

(Bloomberg) — Two senior Republican senators issued clear declarations of support for Federal Reserve Chairman Jerome Powell, whom President Donald Trump has threatened to remove from office.

During Powell’s appearance before the Senate Banking Committee Thursday, Senator Pat Toomey of Pennsylvania noted that Powell had told House lawmakers the day before that he intended to serve his full four-year term.

“I for one am glad to hear that’s your conclusion, in part because I do think it’s important the Fed remain insulated from political pressure,” Toomey told Powell. “I also want to say that I think you’ve done an outstanding job.”

Trump has criticized Powell and his colleagues on a regular basis for almost a full year — first calling on the Fed to stop, and then to reverse, its 2018 interest-rate increases. Trump has also explored the legality of demoting Powell from the Fed chair and claimed he has that authority.

Fed policy makers changed their plan to continue raising borrowing costs this year after prospects for global growth deteriorated, trade tensions flared and inflation showed signs of weakening. Since last month, Powell has signaled that officials are open to cutting rates when they gather at the end of July.

Senator Richard Shelby of Alabama, often a critic of the central bank, also offered Powell his backing in the face of Trump’s pressure.

“Chairman Powell, thank you for your service, thank you for your work to keep the Federal Reserve independent of both parties and do your job for what it was set up to be,” he said. “We salute you for that.”

A number of Democrats also signaled their support for Powell and for the Fed’s independence from political interference.

In response to questioning from one of them, Rhode Island’s Jack Reed, Powell said the Fed would neither cut rates to satisfy Trump, nor avoid cutting to defy him if economic data showed that was necessary.

“Its critical that the public understand that we’re always going to do our work objectively,” Powell said. “We’ll do what we think is right.”

Powell has worked hard to build his relationships with lawmakers. Shortly after taking office in February 2018 he said he intended to “wear the carpets of Capitol Hill out by walking those halls and meeting with members.”

(Updates to add comment to Rhode Island’s Jack Reed in ninth paragraph)

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