Jerome Powell, President Donald Trump’s pick as chairman of the Federal Reserve, said at his confirmation hearing that he supports rolling back some bank regulations, but will protect the central bank’s political independence.
According to The Associated Press, Powell also strongly hinted that the Fed would raise rates again in December.
Powell said he believes the Dodd-Frank Act, passed after the 2008 financial crisis, has succeeded in making the financial system stronger. However, he also believes that in some areas, such as regulation of smaller banks, the law had imposed unnecessary burdens that should be eased.
While many GOP senators were happy to hear Powell’s remarks, Democratic senators pressed him to say whether he would cut key consumer protections in the 2010 law. Powell said that he was “strongly committed” to the political independence of the Federal Reserve.
In addition, he explained that the Fed would continue on a gradual path of raising interest rates and shrinking the Fed’s massive $4.5 trillion balance sheet, adding that he expected it to shrink to around $2.5 trillion to $3 trillion over the next three to four years under a program set in motion by his predecessor, Janet Yellen.
On interest rates, Powell said, “I think the case for raising interest rates at our next meeting is coming together," but he wouldn't give any specifics.
Under Yellen, the Fed raised rates four times starting in December 2015, including two rate hikes this year. Economists expect a third rate hike to occur next month, and they’re projecting at least three additional rate increases in 2018.
Michael Pearce, U.S. economist at Capital Economics, said Powell gave away "little new on either the economic or policy outlook.”