WASHINGTON: President Donald Trump’s pick to lead the US central bank on Monday defended regulations that have made the financial system more crisis-proof, and said interest rates are likely to rise a bit more.
But Federal Reserve Governor Jerome Powell, a former investment banker, said the Fed will continue to look for ways to ease the regulatory burden on banks and tailor the rules to the size of the institution.
“Our financial system is without doubt far stronger and more resilient than it was a decade ago,” Trump’s pick to replace Janet Yellen said in testimony prepared for delivery to his confirmation hearing.
The Fed must work with other agencies to “help ensure that our financial system remains both stable and efficient.”
However, Trump and Republicans in Congress have been highly critical of the tougher regulations adopted in the wake of the 2008 financial crisis, saying they have gone too far and impede lending and economic activity.
Powell, who is due to appear before the Senate Banking Committee on Tuesday, said changes were needed.
“We will continue to consider appropriate ways to ease regulatory burdens while preserving core reforms… so that banks can provide the credit to families and businesses necessary to sustain a prosperous economy.”
The Fed has raised the benchmark lending rate twice this year, and is widely expected to increase it once more in December, despite inflation that is running well below the central bank’s two percent target.
Powell echoed the Fed’s many statements on the path of monetary policy, saying “we expect interest rates to rise somewhat further.”
While he did not give a detailed economic outlook, Powell said he would work “to support the economy’s continued progress toward full recovery, including “a strong jobs market with inflation moving gradually up toward our target.”
Trump early this month nominated Powell to replace Yellen, something no first-term US president had done in 40 years.
Yellen, the first woman to lead the Fed, held the post since 2014 and will leave in February, just as the US economic recovery has begun to crest, with low unemployment, robust growth and low inflation, conditions that have won her praise in many quarters.
Powell is seen as a centrist choice for the role compared to some of the more problematic choices who were in the running.
Yellen’s departure means Trump will be able to name the majority of the seven Fed board members, allowing him to put his mark on monetary policy and a key US bank regulator.
But in a highly politicized environment, Powell once again stressed his commitment to “preserving the Federal Reserve’s independent and nonpartisan status that is so vital” to the pursuit of its mission.