Chairman Barr Urges Fed to Keep its Commitment to Normalization
Congressman Andy Barr (KY-06), Chairman of the House Financial Services Committee’s Monetary Policy and Trade Subcommittee, issued the following statement in response to Federal Reserve (Fed) Chairman Jerome “Jay” Powell’s speech today before the Economic Club of New York:
“I appreciate Chairman Powell’s continued efforts, through his public comments today and regular communications with Members of Congress, to clarify the Federal Reserve’s monetary policy trajectory. Today, Chairman Powell offered for the first time his view that the policy rate is ‘just below’ estimates of the neutral rate.
“While I have no reason to question the Fed’s updated estimate of the level of interest rates that would be neutral for the economy – that is, neither speeding up nor slowing down growth – I would urge the Fed to keep its overall commitment to normalize interest rates and reduce its oversized balance sheet after a protracted period of unconventional monetary policy.
“In sum, I agree with Chairman Powell’s assessment that just as there are risks in raising interest rates too quickly, there are also risks in keeping rates too low for too long and failing to remove distortions in the economy created by a decade of improvisational and overly accommodative policy.”