Federal Reserve press conference, 2020-01-29 — Chair Jerome Powell

Question (Edward Lawrence, Fox Business): Thank you, Mr. Chairman. Edward Lawrence from Fox Business Network. So there was a signing of a ratified USMCA at the White House today. Mid- February, the phase-one China deal gets—goes into effect. Have you seen business investment pick up at all? If not, what will it take to get that business investment going as this uncertainty is—is being cleared up?
Answer: Yes. So I guess I’d start by saying that the fact that we’ve reached a phase-one deal with China and the fact that we’ve moved ahead closer to getting USM[C]A agreed—those are potentially positive things for the economy without question. Without question. And financial markets—the reaction of financial markets is very consistent with that perception. A sustained reduction in uncertainty over time should improve business sentiment, investment, which would provide some additional support for the economy. It’s important, though, to bear in mind a couple of things. First, trade policy uncertainty remains elevated. Businesses continue to identify it as an ongoing risk. We still have two or even three active trade discussions that are going on in the public square right now. So it hasn’t gone away, and we’ve just come through a round of talking to our vast network of comments— sorry, contacts in the business world. And I think, clearly, these are seen as positive developments going forward, but there’s a bit of a wait-and-see attitude—is this going to be sustained? The agreements have to be implemented, too, and that’ll take quite some time. So, I would say, we need to be a little bit patient about the effect on the economy. There’s also the global economy. You could—you could well see manufacturing—as I mentioned, manufacturing PMIs have started to tick up consistently among both advanced economies and emerging market economies. We do not see a decisive recovery, but it’s possible that this mix of positive developments and also accommodative financial conditions could spur further growth.

Question (Hannah Lang, American Banker): Hannah Lang with American Banker. Thank you for being here today. I wanted to ask about Vice Chair Quarles’s recent speech on bank supervision in which he laid out some suggestions for making changes to the supervisory regime. I wanted to ask, do you agree with his approach? And are there any plans to codify some of these suggestions later in the year?
Answer: So I do agree that—the principles that he articulated of firm and fair supervision and effective transparency in communications. I also think it’s a good thing that we would have brighter lines to define our LISCC supervisory portfolio, which we haven’t really had to date. Remember that when a firm moves from one portfolio to another, that doesn’t mean that its level of scrutiny or supervision will change. So—and I also thought that, you know, the—he’s raising some very interesting questions about, if you—in the first part of the speech, where he’s talking about regulation and supervision and, you know, how to—how to balance the desire for transparency and due process in everything the government does with the needs of confidential supervision. It’s a very challenging question. It’s one that could use further thought. And as far as the specific, you know, proposals, there’s—you know, they’re interesting, you know, and need further development and will need lots of comment and that sort of thing.