Federal Reserve Chairman Jerome Powell came to Capitol Hill on Wednesday with two goals: cementing the case for an interest rate cut at the end of this month, and bolstering his own congressional wall of protection against a president who has made a daily habit of Fed bashing unseen since the 1970s. Within a few minutes of the start of what will be two days of testimony before Congress, Powell had gone a long way toward accomplishing both. Financial markets have fixated on interest rates, and after Powell began speaking, traders of futures tied to the Fed's policy interest rate remained fully committed to bets on a rate cut by month's end. But Powell also opened his statement with a clear play to congressional opinion, telling lawmakers he was accountable "to you and the public," not the political interests of the president who appointed him. President Donald Trump has expressed his unhappiness with Powell's failure to cut rates, and has repeatedly said he has the power to fire the Fed chair. Lawmakers on both sides of the aisle made it clear: they are siding with Powell. "I urge Chairman Powell and other Federal Reserve Board governors not to submit to the high pressure tactics of this president who continues to continues to push reckless and harmful economic and social policies," House Financial Services Committee Chair Maxine Waters, a Democrat, told Powell. She asked Powell what he would do if Trump asked him to resign. "Of course I would not do that," Powell said, and repeated that he fully intends to serve his four-year term. The Federal Reserve Act says a president can remove a Fed chair only "for cause," and any move to oust him would likely touch off a legal fight. Patrick McHenry, the panel's top Republican member and a supporter of Trump's economic policies, gave Powell credit for his "proactive communications" with members of Congress and provided his own opening for Powell to push back against Trump's criticism. Does public criticism enhance or impede the Fed's independence, he asked. "Neither," Powell responded, adding that emotion also plays no role in Fed decisions. "We will always focus on doing the job you have assigned us." Republican Senator Patrick Toomey, on the Senate banking panel that will hear from Powell on Thursday, was even more pointed: removing Powell from his post, he told Bloomberg TV, would be a "very bad idea." The congressional support, expressed in the face of a president who has urged the Fed to slash rates and accused Powell of undermining the US economy, does not come out of the blue. As of May, the latest month for which the Fed chairman's public calendars are available, Powell had conducted about 100 meetings or phone calls with Republican lawmakers and 60 with Democrats since taking the job in February 2018. In all, he has spent time with at least 48 of the Senate's current 100 members, including all of the Senate Banking Committee Republicans and nine of the 12 Senate Banking Democrats who will question him on Thursday. He has also met or had a phone call with 45 current members of the House of Representatives, including 13 of the 34 Democrats currently on the House Financial Services Committee, and 14 of the 26 Republicans. All told, over a 16-month period Powell has put in about 72 hours of face- and phone-time with at least 100 different lawmakers, a Reuters review of Powell's calendar shows. That includes 45 hours with Republicans and 27 hours with Democrats. Fed Chair Janet Yellen's public calendars reflect meetings with just 70 different lawmakers over the course of her four-year tenure. One Republican, Andy Barr, registered his wholehearted support of criticism of Trump's fault-finding with Fed policy, saying that wherever it comes from, such feedback is a "necessary and constructive part of oversight (that) in no way compromises Fed independence." Powell pushed back mildly. "You have oversight over us," he said, unlike in other countries where the finance ministry oversees the central bank. "In our system of government, it's Congress." Powell has made outreach to Congress a signature part of his job, and it is paying dividends. "Stay strong and courageous," urged David Scott, a Democrat from Georgia. "Have no fear: the president can't fire you, and we in Congress, both Democrats and Republicans, got your back." — Reuters
