Newly minted Federal Reserve Chairman Jerome Powell testified before Congress for the first time today. He told members of Congress that he plans to continue the Fed’s “further gradual increases” of interest rates — not an entirely surprising move given the economy he is inheriting.
Powell’s emphasis on staying the course also reflects his time as a governor of the central bank — Powell rarely disagreed with predecessor Janet Yellen's direction. In fact, Powell’s speech today included many ideas — and even exact phrases — that Yellen has put forward before. So is it more of the same ol’ same ol’? To see just how similarly the two Fed chairs' think, we pulled a few of their statements for comparison.
Can you tell who said it?
“In fact, inflation has continued to run below the 2 percent rate that the FOMC [Federal Open Market Committee] judges to be most consistent over the longer run with our congressional mandate.”YellenPowell
That was Powell in his testimony to Congress.
Yellen said something similar in a statement to Congress on July 12, 2017: “But because we also anticipate that the factors that are currently holding down the neutral rate will diminish somewhat over time, additional gradual rate hikes are likely to be appropriate over the next few years to sustain the economic expansion and return inflation to our 2 percent goal.”
“In evaluating the stance of monetary policy, the FOMC routinely consults monetary policy rules that connect prescriptions for the policy rate with variables associated with our mandated objectives. However, such prescriptions cannot be applied in a mechanical way; their use requires careful judgments about the choice and measurement of the inputs into these rules, as well as the implications of the many considerations these rules do not take into account.”YellenPowell
That was Yellen. Powell used almost the exact same language at the end of his report to Congress:
“In evaluating the stance of monetary policy, the FOMC routinely consults monetary policy rules that connect prescriptions for the policy rate with variables associated with our mandated objectives. Personally, I find these rule prescriptions helpful. Careful judgments are required about the measurement of the variables used, as well as about the implications of the many issues these rules do not take into account.”
“In the FOMC's view, further gradual increases in the federal funds rate will best promote attainment of both of our objectives. As always, the path of monetary policy will depend on the economic outlook as informed by incoming data.”YellenPowell
That was Powell in his testimony to Congress. But Yellen is known to use the phrase “informed by incoming data,” a lot. Here’s Yellen using the phrase in a similar statement to Congress on July 12, 2017:
“FOMC participants will adjust their assessments of the appropriate path for the federal funds rate in response to changes to their economic outlooks and to their judgments of the associated risks as informed by incoming data.”
“At present, I see roughly equal odds that the U.S. economy's performance will be somewhat stronger or somewhat less strong than we currently project.”YellenPowell
That was Yellen. But they both think the economy is basically strong.
“At this point, we do not see these developments as weighing heavily on the outlook for economic activity, the labor market, and inflation. Indeed, the economic outlook remains strong,” Powell said, after reviewing inflation.
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