28th November 2017

By Steven K. Beckner

Federal Reserve Governor Jerome Powell, President Trump's nominee to succeed Janet Yellen as Fed Chairman in February, aced his confirmation hearing Tuesday. The 64-year-old former lawyer and investment banker seemed totally at home testifying before the Senate Banking Committee. He handled questions from the Senators with aplomb and good humor, while declining to venture into sensitive areas such as tax reform as he repeatedly referenced the Fed's statutory "dual mandate" of maximum employment and price stability. When it came to monetary policy, Powell broke no new ground. The down-to-earth non-economist was forthright in strongly signaling a December rate hike, but showed a collegial respect for the views of fellow members of the Federal Open Market Committee ahead of the Dec. 12-13 meeting. He let it be known his practice is "not to talk about individual meetings," because "that's why we have the meetings -- to go in and listen carefully to each other’s views." Nevertheless, he added, "The case for raising rates at our next meeting is coming together ... I think the conditions are supportive of doing that." Longer range, Powell vowed interest rates will continue to rise. For older Americans dependent on low-earning fixed income investments, he promised, "help is on the way." After a worthwhile period of "patience" on normalizing interest rates, he said a "strong" economy means that "the very low settings for interest rates after the crisis are no longer appropriate. That's why we're raising rates on a gradual path, and I expect that will continue." The FOMC may raise rates “more slowly” or “more quickly” depending on inflation. Powell twice easily won confirmation to the Fed Board of Governors, and this time should be no different.   target.