Fed’s Powell defends central bank independence as challenges loom

NEW YORK, July 9 (Reuters) – Federal Reserve Chair Jerome Powell said on Tuesday central bank independence is a proven and politically popular way to achieve the best possible outcomes for the U.S. economy.

“The record is pretty clear” that a central bank that operates outside of political factors and direction is “a good institutional arrangement that serves the public well,” Powell said, adding “as long as it’s seen to serve the public well, it’s a good choice.”

Powell’s comments came during testimony on monetary policy and the economy given before the Senate’s Committee on Banking, Housing, and Urban Affairs.

Powell flagged the ubiquity of independence at central banks among major economies, where the institutions are afforded latitude to achieve their respective mandates without being directed to do so by political authorities. A key aspect of independence is that it gives central banks space to make difficult choices when it comes to managing inflation.

Source: REUTER