Was This a Fed Chief Talking? How Powell Sounded Different


Only recently has the Federal Reserve tried to communicate directly and transparently to the public. Its new chairman is pushing ahead on that frontier.

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Jerome H. Powell, the Federal Reserve chairman, fielded reporters’ questions on Wednesday after the Fed’s policymakers ended their meeting.CreditMichael Reynolds/Epa, via Shutterstock

Federal Reserve chiefs were long known for saying little, and making what they did say as opaque as possible. It’s been barely seven years since central bankers began to hold news conferences after policy meetings — and even then, only on alternate occasions.

In his news conference on Wednesday, Jerome H. Powell, who became Fed chairman in February, moved the central bank further into the daylight. He said he would meet reporters after the conclusion of each policy meeting. And he departed in many ways from the guarded or arcane language others favored. Here are notable examples.

Mr. Powell dispensed with the usual practice of reading the full statement of the Fed’s Open Market Committee, which sets rates, before taking questions. His aim, he said, was to “start with a plain English summary of how the economy is doing.” He certainly did that: He didn’t resort to even a single statistic at the start of his opening remarks.

Under Mr. Powell’s predecessor, Janet L. Yellen, the Fed had a term for what he’s describing: “data dependent.” He omitted that phrase here, in favor of “plain English” words.

Fed leaders are typically hesitant to make bold pronouncements about the future, and are more comfortable discussing current conditions, or trends from the recent past. Mr. Powell seems more willing to make firm predictions.

First-person-singular alert. Fed chiefs normally use the royal “we,” or at least put the committee first when summing up their positions. Mr. Powell seems more willing to go it alone.

Books have been written on the Fed and its role in the American economy. But Mr. Powell summed it up in four words, and didn’t even cite the classic description: “dual mandate.”

Ms. Yellen was careful to qualify descriptions of the economy’s strength with a nod to those left behind, especially workers who were still on the sidelines or had not benefited much from the recovery. Mr. Powell offered an unreserved assessment of growth and good times.

Still, the Fed chairman showed discretion and restraint. He could have nodded to the risks posed to the global economy and key trading partners by tariffs or a trade war. But Mr. Powell seemed careful not to overstep the Fed’s purview — “I’m really committed to staying in our lane on things,” he said — by faulting Congress or the White House.

Nelson D. Schwartz has covered economics since 2012. Previously, he wrote about Wall Street and banking, and also served as European economic correspondent in Paris. He joined The Times in 2007 as a feature writer for the Sunday Business section. @NelsonSchwartz

BBC to Resurrect Full ‘Rivers of Blood’ Speech, Spurring Outrage


Mr. Powell’s address, which he called “The Birmingham speech,” criticized immigration from Commonwealth countries to the United Kingdom and proposed a new policy in which migrants would return to their countries of origin.

He argued that the Race Relations Bill 1968, intended to ban racial discrimination in housing, employment, commerce and public services, would disadvantage “the indigenous population” and that it would be like “throwing a match on to gunpowder.”

The speech is rife with incendiary language:

• “Those whom the gods wish to destroy, they first make mad. We must be mad, literally mad, as a nation, to be permitting the annual inflow of some 50,000 dependents [of immigrants already in the country] who are for the most part the material of the future growth of the immigrant-dependent population. It is like watching a nation busily engaged in heaping up its own funeral pyre.”

• Referring to the consequences of immigration on the British-born: “They found their wives unable to obtain hospital beds in childbirth, their children unable to obtain school places, their homes and neighborhoods changed beyond recognition.”

• The speech ends by quoting a prophecy of civil war from Virgil’s “Aeneid”: “As I look ahead, I am filled with foreboding. Like the Roman, I seem to see ‘the River Tiber foaming with much blood.’ ”

What was the reaction, then and now?

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Anti-racist demonstrators gathered in Wolverhampton, the English town where Mr. Powell had his parliamentary district, in 1970.

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Leonard Burt/Central Press, via Getty Images

The 45-minute speech divided the nation in the 1960s and caused a political storm. Some Labour lawmakers threatened Mr. Powell with charges of inciting racial hatred, and the Conservative leader, Edward Heath, said in a television interview that he believed the speech was “inflammatory” and “liable to damage race relations.”

Mr. Heath ousted Mr. Powell from his position as defense spokesman the day after the speech.

But in the days that followed, about 1,000 London dock workers staged a protest in favor of Mr. Powell, and he received thousands of letters of support.

The speech is still widely remembered in Britain, and it is sometimes alluded to in debates over immigration. Some politicians who campaigned for Britain to leave the European Union in the 2016 referendum referred to Mr. Powell, who strongly opposed British membership of what became the European Union.

Mr. Powell left the Conservative Party in 1974 over that issue. He died in 1998.

The BBC’s announcement on Thursday that it would broadcast the entire speech on Saturday — with its media editor, Amol Rajan, presenting — prompted a widespread backlash. Thousands of people, including politicians and public figures, took to social media to demand that the broadcaster reverse its decision.

Many said the broadcast would normalize hatred.

Andrew Adonis, a Labour member of the House of Lords, described the planned broadcast on Twitter as “disgraceful” and said that the anti-immigration speech was “the worst incitement to racial violence by a public figure in modern Britain.”

Shirin Hirsch, a University of Wolverhampton academic who contributed to the program, expressed regret for participating and said she was “disgusted” by how it was being promoted.

Charlie Brinkhurst-Cuff, an opinions editor at gal-dem.com, a magazine website written by women of color, said the BBC’s decision was “one of the most tone-deaf displays of media hypocrisy.”

“It’s a flamboyant party trick that masks the deadly undertones of racism in British society that still exist,” she wrote in The Guardian, noting the soaring number of hate crimes in Britain over the past three years.

Lord Adonis also wrote a letter to the head of Ofcom, Britain’s communications regulator, asking that the program to the scrapped.

Some social media users, however, not only backed the broadcast, but tweeted incendiary and sometimes discriminatory comments under the hashtag #EnochPowellWasRight.

What is the BBC’s defense?

In a statement, the BBC said, “This is a rigorous journalistic analysis of a historical political speech. It’s not an endorsement of the controversial views and people should wait to hear the program before they judge it.”

A spokeswoman for Ofcom said in a statement, according to local news outlets: “Ofcom’s powers, granted by Parliament, are as a post-broadcast regulator. This means that we wouldn’t check or approve any broadcaster’s editorial content before transmission.”

Mr. Rajan, the BBC’s media editor, defended the decision in a tweet to Lord Adonis and explained that the speech would be critiqued throughout the program.

Meanwhile, on the speech’s 50th anniversary next Friday, anti-racism campaigners and members of Parliament planned to hold an event to celebrate the multiculturalism of Birmingham.

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Fed Officials Have Concerns About Trade, March Meeting Minutes Show


However, the minutes reflect officials’ uncertainty about how big that boost might be, and when it might come, because there is little historical precedent for such fiscal stimulus when unemployment is so low. The minutes also show that policymakers “suggested that uncertainty about whether all elements of the tax cuts would be made permanent, or about the implications of higher budget deficits for fiscal sustainability and real interest rates, represented sources of downside risk to the economic outlook.”

The meeting was the first under the Fed’s new chairman, Jerome H. Powell. At the session’s conclusion, officials announced that they would raise interest rates for the sixth time since the end of the Great Recession, in the range of 1.5 to 1.75 percent. Officials released economic projections indicating that they expected to raise rates three times next year, more than the two increases in 2019 that they had forecast in December. The Fed said at the time the economy was continuing to get stronger and that the central bank remained on track to keep raising rates gradually. Mr. Powell echoed those sentiments at a news conference after the meeting.

The minutes suggest that decision on interest rates generated little controversy: “All participants agreed that the outlook for the economy beyond the current quarter had strengthened in recent months,” and that they expected the annual inflation rate to rise in the months to come.

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Feed hoppers in Polo, Ill., this month. The Fed’s March meeting minutes show policymakers discussing concerns in the farm industry about the potential impact of the Trump administration’s decision to impose tariffs on imports.

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Daniel Acker/Reuters

But the minutes say that a “couple of participants” suggested the Fed would benefit from holding off until a future meeting to raise rates, in order to wait for more data to confirm evidence that the rate of inflation was approaching the Fed’s target of 2 percent annual growth.

Officials also debated the benefits of the economy’s running hot — with unemployment very low and growth above forecast trends — for a prolonged period of time, weighing the potential for drawing more workers back to the labor force against the risk of financial instability and “significant” inflation growth.

Officials also seemed to shrug off the increase in stock market volatility in February, attributing it in part to Labor Department reports that the suggested growth in wages — and, with it, inflation — was gaining steam, which could force the Fed to raise rates faster than expected. “Many participants reported that their contacts had taken the previous month’s turbulence in stride,” the minutes read.

The official statement released immediately after the March meeting did not mention trade policy concerns, which roiled financial markets after the Trump administration announced its plans to impose tariffs on imported steel and aluminum, as well as on some other Chinese goods. Mr. Powell acknowledged those concerns at his news conference, saying that trade policy had begun to worry business leaders who speak with Fed officials. Still, he played down any immediate threat to growth.

“There’s no thought that changes in trade policy should have an effect on the current outlook,” Mr. Powell said at the news conference, adding that could change if a global trade dispute escalated.

In a speech in Chicago last week, Mr. Powell elaborated on the Federal Open Market Committee’s concerns during a question-and-answer session.

“The discussion about tariffs is at a relatively early stage, and we talked about this at the F.O.M.C. meeting a couple of weeks ago now,” he said. “And people really don’t see yet any implications in the near term for the outlook, because we don’t know the extent to which the tariffs will actually come into effect and, if so, how big will that effect be and what will the timing of it be.”

Any negative effects from tariffs could put the Fed in a bind, forcing policymakers to break what Mr. Powell and his predecessors have repeatedly characterized as a delicate balance between supporting economic growth and job creation, and holding inflation to the target growth rate. Economists generally view tariff fallout as stagflationary, meaning it hurts growth and also feeds inflation. Taxes on imported goods raise prices for businesses and consumers, pushing up the inflation rate, while also dampening consumption and economic growth.

The minutes suggest that Fed officials are worrying more about that possibility than they have acknowledged publicly: “Most participants also cited trade policy as a source of either uncertainty or downside risk,” the minutes say.

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More Jobs, Faster Growth and Now, the Threat of a Trade War


The Fed chief, who took his post in February, said it was “too early to say” what impact the dueling trade measures would have. “We don’t know the extent to which the tariffs will actually come into effect and, if so, how big will that effect be and what will the timing of it be,” Mr. Powell said. But he made it clear that the Fed would watch closely for any sign that the trade dispute was knocking the recovery off course.

The trade tensions complicate what was already a tricky task for the Fed. Hundreds of billions of dollars in tax cuts and spending increases risk fueling inflation, as do wage pressures from a robust labor market. The government’s monthly jobs report on Friday, while more subdued than in recent months, still pointed to a healthy employment picture.

Yet policymakers are wary of acting too aggressively to slow the economy at a time when wage growth has been tepid. The Fed’s response has been gradual interest-rate increases.

A trade war could act as a drag on economic growth, forcing the Fed to be even more cautious. But tariffs could also raise consumer prices by limiting cheap imports from China and other countries. That could increase the risk that the Fed will lift rates too quickly, choking off the recovery.

“There’s an immediate, knee-jerk reaction to tighten policy more,” said Ellen Zentner, chief United States economist for Morgan Stanley.

The latest escalation between the United States and China came Thursday evening, when Mr. Trump said he was considering tariffs on an additional $100 billion of Chinese imports. That came on top of the tariffs on steel and aluminum imposed last month and those on $50 billion in Chinese goods that he proposed in recent days. China has responded with its own new tariffs.

It is not clear whether Mr. Trump will make good on his latest threats. Larry Kudlow, Mr. Trump’s new top economic adviser, has sought to portray the tariffs as an opening bid in a negotiating process with China, and he told reporters on Friday that “there are all kinds of back-channel discussions going on.”

But Mr. Trump’s Treasury secretary, Steven Mnuchin, indicated that tensions had reached a more combustible level. “There is the potential of a trade war,” Mr. Mnuchin said Friday on CNBC. “There is a level of risk that we could get into a trade war.”

The trade upheaval threatens to undermine an American economy that is at its strongest point since the financial crisis struck a decade ago. Employers have added jobs for 90 consecutive months, by far the longest streak on record; the unemployment rate, at 4.1 percent, is the lowest since 2000.

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Imported soybeans being unloaded in Nantong, China. In response to President Trump’s trade salvos, China proposed new tariffs on American soybeans, which could hurt farmers already struggling with low prices for their crops.

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Agence France-Presse — Getty Images

“The labor market has been strong, and my colleagues and I on the Federal Open Market Committee expect it to remain strong,” Mr. Powell said on Friday, referring to the Fed’s policy group.

Wage growth, weak for much of the recovery, ticked up in March, and Mr. Powell said he expected the gains to continue in the months ahead. And while workers would, without a doubt, like to see their pay rise more quickly, the gradual pace is comforting for some investors, who have been watching for any hints that the economy is overheating.

In his speech, Mr. Powell said the Fed saw “other signs of economic strength,” citing “steady income gains, rising household wealth and elevated consumer confidence,” which he said would continue to support consumer spending.

Other economists agreed, saying that the recently passed tax and spending measures give the economy added momentum. A full-blown trade war might be enough to short-circuit the recovery, they said, but isolated tariffs — even large ones — most likely are not.

Certain categories are more vulnerable. Among the retaliatory moves announced by China are new tariffs on soybeans, which could hurt American farmers already struggling with low prices for their crops.

The nation’s factories, a sector that Mr. Trump has championed, have become a bright spot in the recovery — a development Mr. Powell underlined on his Chicago visit by touring an incubator for industrial start-ups. But Mr. Trump’s tariffs could force manufacturers to pay more for materials, and China’s countermeasures could hurt their overseas sales.

Just the prospect of tariffs — even before they begin to take a direct bite — could hurt the economy if it makes corporate executives reluctant to invest.

Becky Frankiewicz, president of ManpowerGroup, a staffing firm, said she was already hearing from clients that they are more hesitant to commit to major projects, at least until they see whether this week’s skirmishes develop into an all-out trade war.

“We’re not seeing the impact directly of tariffs yet, but we would say there’s pretty broad conservatism as a result,” she said.

Mr. Powell said Fed policymakers, too, were conscious of concerns from corporate executives.

“We did hear from a number of business leaders around the country that changes in trade policy had become a bit of a risk to the medium-term outlook,” Mr. Powell said in the question-and-answer session.

Continued turmoil in financial markets could begin to hurt spending, especially among higher earners, who are more likely to own stocks. Ms. Zentner said surveys suggested that some high-income consumers had already become more pessimistic as markets have become more volatile.

“It’s starting to affect those groups, whose spending is more tied to the stock market,” Ms. Zentner said. “If they simply pause their spending or become more prudent in their spending because of market volatility, it drags down consumer spending in the aggregate.”

The effect of all this on the Fed’s thinking won’t be clear until the next policy meeting on May 1 and 2. Fed officials raised interest rates by a quarter of a percentage point at their most recent meeting, in March, to a range of 1.5 percent to 1.75 percent. Officials indicated that they considered the economy and labor market healthy, and that they expected to raise rates twice more this year and three times in 2019.

Mr. Powell, like his predecessor, Janet L. Yellen, cast that gradual series of increases as a carefully planned strategy to ensure that the Fed will not need to raise rates abruptly in the event of a steep rise in inflation. But he also cautioned that policymakers could change course if necessary.

“Our views about appropriate monetary policy in the months and years ahead will be informed by incoming economic data and the evolving outlook,” Mr. Powell said. “If the outlook changes, so will monetary policy. Our overarching objective will remain the same: fostering a strong economy for all Americans — one that provides plentiful jobs and low and stable inflation.”

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The Week Ahead: White House to List Chinese Products Facing Tariffs and the March Jobs Report


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A television production line at a factory in Lianyungang, China. The Trump administration is expected this week to announce the list of Chinese products that will be hit with tariffs.

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Agence France-Presse — Getty Images

TRADE

Trump to release list of next tariff targets.

The Trump administration is expected this week to announce the list of Chinese products that will be hit with tariffs over what the administration has called the country’s theft of intellectual property. Mr. Trump has said the levies will affect at least $50 billion in imported goods and will most likely focus on cutting-edge tech products of the kind that United States fears losing out on to China. Americans are more likely to feel the impact of these tariffs than those applied to steel and aluminum in March, because they will probably hit consumer products found on store shelves, rather than raw materials used by manufacturers. Natalie Kitroeff

ECONOMY

A new interest rate emerges on Tuesday.

The Federal Reserve Bank of New York will begin publishing a new short-term market interest rate on Tuesday. The Secured Overnight Financing Rate, or S.O.F.R., was created to wean the world’s financial markets off the London Interbank Offered Rate, or Libor, a benchmark rate that currently serves as the basis for hundreds of trillions of dollars of financial instruments — from interest rate swaps to credit card and mortgage debt — that incorporate floating interest rates. Since the 2008 financial crisis, policymakers and financial institutions alike have wanted to find a replacement for Libor, as the process for setting the rate has been vulnerable to manipulation. The New York Fed’s new rate is based on the rates in the active market for a kind of short term-loan known as a repurchase agreement, or repo, which uses Treasury securities as collateral. Matt Phillips

REGULATION

Companies in Britain must lay out gender pay gaps.

By Wednesday, thousands of companies with at least 250 employees in Britain must publish figures showing their gender pay gap for the fiscal year ending in 2017. The requirement to submit this data to the government has put pressure on companies to explain the differences, which are often a result of fewer women in management and more women in lower-paid levels or occupations. EasyJet, one of the companies that has already filed, reported a 52 percent pay gap and its chief executive cut his salary by 34,000 pounds to match his female predecessor’s earnings. The filings have fueled debate over pay for women, which has been under greater scrutiny since the British Broadcasting Corporation attracted high-profile criticism for its pay practices. Amie Tsang

ECONOMY

Job growth probably slowed in March.

Last month’s jobs report was a barn burner: Employers added 313,000 jobs in February, the most in one month since 2016, and the strong labor market drew hundreds of thousands of Americans into the work force. March’s data, due from the Labor Department on Friday, is unlikely to match those highs. Still, all signs point to the job market — and the economy, in general — remaining strong. Economists surveyed by Bloomberg expected the report would show a gain of 189,000 jobs and a decline in the unemployment rate to 4 percent, which would represent the best mark since 2000. And in good news for workers, economists expect a modest pickup in wage growth, which was sluggish in February and has been weak for much of the nearly nine-year-long recovery. Ben Casselman

Fed’s Chairman Powell to visit Chicago.

Jerome H. Powell will make his first speech outside Washington as the chairman of the Federal Reserve on Friday, choosing an itinerary that demonstrates his concern for business and entrepreneurship. Mr. Powell will tour a manufacturing incubator in Chicago on Friday afternoon, after giving a speech on the economic outlook at the Economic Club of Chicago. Jim Tankersley

INTERNATIONAL

The Saudi Crown Prince wraps up a busy United States tour.

Crown Prince Mohammed bin Salman of Saudi Arabia has met with President Trump, business leaders, journalists, technology executives and even rabbis on his whirlwind multiweek tour of the United States. He will finish up his trip on Saturday in Houston, the global energy capital, with visits to Saudi Aramco facilities, including a technology center and a refinery outside the city. Clifford Krauss

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A Tax on Tech Titans, an I.P.O. for Dropbox and a Tariff Deadline


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Federal Reserve policymakers will meet this week to discuss interest rates, the first such session with Jerome H. Powell as the central bank’s new chairman.

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Erin Schaff for The New York Times

Here’s what to expect in the week ahead:

Regulation

Europe to proceed with tech tax.

The European Commission is expected this week to unveil a plan for revamping how technology companies are taxed on their digital revenue. The proposal is the latest push in a campaign by Brussels to more strongly regulate the titans of the tech industry — particularly dominant players like Amazon and Apple that have drawn scrutiny for their efforts to maximize profits by recording earnings in lower tax jurisdictions like Ireland and Luxembourg. The move comes as criticism persists that the European Union unfairly focuses on American companies, an accusation that Brussels denies. Prashant S. Rao

Technology

Drop it like a stock.

Investors will be watching to see whether the online file storage company Dropbox successfully goes public this week. If it does, they’ll want to see what Wall Street’s response says about the prospects for other so-called unicorns, the start-ups valued at more than $1 billion by the private investors that have so far financed their growth. Although privately valued at $10 billion, Dropbox recently set an initial price range for its shares at $16 to $18, for a value of $7 billion to $7.9 billion. One question is whether Dropbox, and others that may follow it to market, can avoid the fate of Snap, the company behind the Snapchat app, which has struggled to stay above its $17-a-share offering price since going public a year ago, and the meal-delivery start-up Blue Apron, which went public at $10 a share last June and is now trading well below that.

Economy

Jerome Powell’s first meeting as Fed chairman.

Federal Reserve policymakers are set to meet on Tuesday and Wednesday to discuss interest rates, the first such session with Jerome H. Powell as the central bank’s new chairman. With the job market tight and inflation picking up only gradually, the Fed is widely expected to raise rates by a quarter of a percentage point in what is likely to be the first of three rate increases this year. After the meeting, Mr. Powell will hold his first news conference in his new role, where observers will be listening closely for any suggestion that the Fed might depart from its anticipated path, and, if so, why.

Trade

Deadline looms for duties on imported metals.

The steep tariffs ordered by President Trump on imported aluminum and steel are to take effect on Friday. Like much else coming out of the White House these days, how strict that deadline is — and to which countries the tariffs will apply — is a somewhat open question. Mexico and Canada have already been given exemptions from the duties while negotiations continue over the North American Free Trade Agreement, which the Trump administration wants to alter significantly. Mr. Trump has hinted that Australia and other nations with close ties to the United States could also get a reprieve, setting off a rush by other nations as well as foreign companies and their American partners, for similar treatment. Those favorable arrangements could be worth billions of dollars.

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