Should Fed Chairman Powell resign according to Bessant?

U.S. Treasury Secretary Janet Yellen voiced support for Federal Reserve Chairman Powell amid recent criticisms.

Ms. Yellen affirmed there is no reason for Powell to resign prematurely and emphasized the importance of him continuing his term until next year to consolidate the reform of Fed's non-policy activities.

Why does the U.S. Treasury Secretary support Fed Chairman Powell?

Janet Yellen affirmed there are no signs indicating Powell needs to resign, according to her interview on July 22, 2023. Her perspective reflects confidence that Powell should complete his term until May 2024 and continue his professional and managerial responsibilities.

She said: "If Powell wants to complete his term, I hope he can. If he wants to leave early, he can, but there is no pressure to resign immediately." This stance helps ease internal tensions and sends a message of stability in the U.S. financial system.

How is Powell being criticized by the Trump administration and Congress?

Fed Chairman Powell faces significant pressure from the previous administration due to his policy of maintaining stable interest rates, which is believed to raise concerns about inflation when the government increases tariffs. Some Republican members also oppose the Fed building renovation plan due to its controversial large budget.

These objections reflect differences in economic policy perspectives and Fed budget management, aimed at controlling inflation and maintaining USD credibility in the global market.

"There is a real opportunity for Powell now in rationalizing the Fed's non-monetary activities, thereby creating his legacy."

Janet Yellen, U.S. Treasury Secretary, interview on Fox Business Channel, 22/7/2023

What Fed activities does the Treasury Secretary propose to review?

Ms. Yellen suggested conducting a comprehensive assessment of the Fed's non-monetary activities to ensure efficiency and transparency, including renovation projects for the Federal Reserve building – one of the controversial items regarding cost and necessity.

This review aims to enhance accountability and ensure resources are used rationally in the context of global economic instability and public financial control pressures.

Assessing the impact of Fed policies on the current U.S. economy?

The Fed's policy of maintaining stable interest rates, directed by Powell, aims to control inflation without harming economic growth, which is a significant challenge as the U.S. faces consequences of tariffs and supply chain crises.

Top financial experts believe balancing growth and price control will determine the effectiveness of sustainable economic recovery.

How do stakeholders view Fed Chairman Powell's legacy?

Powell's expected legacy lies in reforming and improving non-policy activities at the Fed, helping to enhance transparency and accountability. The Treasury Secretary's perspective highlighted this as an opportunity to strengthen community and financial market confidence.

Frequently Asked Questions

Is Powell really under pressure to resign?

No. The Treasury Secretary confirmed there are no signs Powell must resign early and he is expected to complete his term until May 2024.

What are the main reasons Powell is being criticized?

Powell is opposed for maintaining stable interest rates causing inflation concerns and the large spending plan for renovating the Fed building.

What is the purpose of reviewing Fed's non-policy activities?

The purpose is to improve management efficiency, control costs, and increase transparency in projects unrelated to monetary policy.

How does the Treasury Secretary assess Powell's future?

She expects Powell will seize the opportunity to improve and consolidate non-monetary activities, linked to his legacy.

How do the Fed's stable interest rate policies impact the economy?

It helps control inflation in an unstable economic context, however, also creates challenges in balancing growth and prices.