U.S. Federal Reserve Chairman Jerome Powell looks on during a Society for Advancing Business Editing and Writing (SABEW) Annual Conference on April 4 in Arlington, Va.Anna Moneymaker/.
U.S. Federal Reserve chair Jerome Powell prefers to wear purple ties.
His sartorial statement was initially born of personal preference. Now the hue of his cravat is a symbol of his determination to protect the central bank’s independence.
“At the beginning, the only significance was that I like purple ties,” Mr. Powell told journalists on Friday. But wearing a blue or red tie became “awkward” because those colours are identified with the Democrats and Republicans.
“We are strictly non-political. I can’t stress that enough,” he said. “It’s not that we’re bipartisan, we are non-political. We don’t do that. So, purple is a good colour for that.”
Mr. Powell is proving to be as deft and diplomatic as President Donald Trump is clumsy and crude. He is standing out as a rare calming force at a time when Mr. Trump is inciting a global trade war that risks reigniting inflation and pushing the U.S. economy into a recession.
By modelling self-restraint, the U.S.’s top central banker is protecting the integrity of the Fed, even as Mr. Trump puts increasing and inappropriate pressure on him to cut interest rates.
“We have this great thing called our independence of monetary policy, and that’s critical for us to be able to do our job,” Mr. Powell told delegates at a conference for the Society for Advancing Business Editing and Writing, an association for business journalists, in the Washington suburb of Arlington, Va.
“But for us to keep that independence, we need to not succumb to the temptation to want to be a player on issues that are not assigned to us.”
U.S. Fed chief Jerome Powell sees higher inflation in wake of Trump tariffs
That means skillfully steering clear of politics, even though Mr. Trump’s evolving policies, including on trade, taxation and immigration, are complicating the Fed’s dual mandate of controlling inflation while also maximizing employment.
Trade shocks, in particular, create a bind for central bankers because they hurt the economy while simultaneously increasing prices, thereby complicating future interest rate decisions. That’s because cutting interest rates would prop up a slowing economy but risk inflaming inflation. Raising interest rates or holding them steady, meanwhile, would fight inflation but deepen any economic slowdown.
On Friday, Mr. Powell said the U.S government’s global tariffs were larger than expected and were likely to fuel higher and more persistent inflation while slowing economic growth. He also stressed that it will take time for the central bank to assess the effects of higher tariffs, given the lack of details about which imports will face levies and for what duration.
Still, Mr. Powell made it clear that it is not the central bank’s role to comment on the merits of the Trump administration’s policies, adding the American people expect the Fed to be driven by careful analysis and thoughtful debate.
“They expect us to tell the truth, and that’s what we’re going to do,” the Fed chair said. “But at the same time we’re not part of – we don’t want to be part of – the broader political discussion about the wisdom of policies that are not assigned to us.”
Mr. Trump, though, is relentlessly goading Mr. Powell.
In a post Friday on social-media platform Truth Social, the President said, “This would be a PERFECT time for Fed Chairman Jerome Powell to cut Interest Rates. He is always ‘late,’ but he could now change his image, and quickly …CUT INTEREST RATES, JEROME, AND STOP PLAYING POLITICS!”
It was entirely predictable that Mr. Trump would make the Fed a target. He campaigned on an illogical promise to lower interest rates, and had already broken from a longstanding convention that presidents do not attempt to directly influence the nation’s central bank.
During his first term, Mr. Trump branded Mr. Powell an “enemy” of the American people and disparaged the Fed as “weak.”
Mr. Trump, who takes a selective view of American history, appears doomed to repeat the mistakes of a Republican predecessor. In the 1970s, then-president Richard Nixon put pressure on Fed chair Arthur Burns to engage in expansionary monetary policies ahead of an election, resulting in rampant inflation.
At a time when Mr. Trump is conducting a broad-based campaign to corrode or crush nearly every American institution, Mr. Powell shines as a beacon of incorruptibility.
