Next Fed chief Jerome Powell vows to ‘respond decisively’ to any new economic crisis

The US Federal Reserve should “respond decisively” to any new economic crisis, Fed chair nominee Jerome Powell told the US Senate Banking Committee on Tuesday, positioning himself as an heir to the central bank policies of current chair Janet Yellen and her predecessor Ben Bernanke.

At his confirmation hearing before the banking panel, President Donald Trump’s nominee to take over as Fed chair endorsed the core ideas that have defined US central banking since the financial crisis of 2007 to 2009 – a willingness to move aggressively against a downturn, and an insistence on flexibility and independence from political influence in setting policy.

“We must retain the flexibility to adjust our policies in response to economic developments,” said Powell, who has served as a Fed governor since 2012, a term spanning the end of Bernanke’s chairmanship and Yellen’s four years as Fed chief.

“We must be prepared to respond decisively and with appropriate force to new and unexpected threats to our nation’s financial stability and economic prosperity.”

During Powell’s time as a governor, the Fed has regularly come under the criticism of Republican lawmakers worried that the central bank’s bond buying and other crisis response programmes created risks to the financial system, and that central bankers had accumulated too much discretionary power.