Powell Fights for Higher Ground
Although Chairman Powell’s statement today that the Fed does not make climate policy is not unprecedented, the express emphasis he chose to place on it speaks to even greater Fed political sensitivity about its independence given GOP control of the House. As previously noted, the Fed will come under challenges to its mandate and even structure, making the central bank even warier than ever about emphasizing the dispassionate nature of its monetary-policy decisions. Indeed, comments about a narrow mission also mentioned the importance of avoiding “social” objectives, implicit rejection not only of a climate mission, but also of one focused on racial equity.