jerome h powell : confirmation hearing testimony by mr jerome h powell, member of the board of governors of the federal reserve system, before the committee on banking, housing, and urban affairs, us senate, washington dc, 28 november 2017. * * * chairman crapo, ranking member brown, and other members of the committee, thank you for expeditiously scheduling this hearing and providing me the opportunity to appear before you today. i would also like to express my gratitude to president trump for the confidence he has shown by nominating me to serve as chairman of the board of governors of the federal reserve system. the federal reserve has had a productive relationship with this committee over the years, and, if you and your colleagues see fit to confirm me, i look forward to working closely with you in the years ahead. before i continue, i would like to introduce my wife, elissa, who is sitting behind me. i would not be here today without her unstinting love, support, and wise counsel. as you know, i have served as a member of the board of governors and the federal open market committee ( fomc ) for more than five years, contributing in a variety of capacities, including most recently as chairman of the board ’ s committee on supervision and regulation. my views on a wide range of monetary policy and regulatory issues are on the public record in speeches and testimonies during my service at the fed. the congress established the federal reserve more than a century ago to provide a safer and more flexible monetary and financial system. and, almost exactly 40 years ago, it assigned us monetary policy goals : maximum employment, meaning people who want to work either have a job or are likely to find one fairly quickly ; and price stability, meaning inflation is low and stable enough that it need not figure into households ’ and businesses ’ economic decisions. i have had the great privilege of serving under chairman bernanke and chair yellen, and, like them, i will do everything in my power to achieve those goals while preserving the federal reserve ’ s independent and nonpartisan status that is so vital to their pursuit. in our democracy, transparency and accountability must accompany that independence. we are transparent and accountable in many ways. among them, we affirm our numerical inflation objective annually and publish our economic and interest rate projections quarterly. and, since 2011, the chairman has conducted regular news conferences to explain the fomc ’ s thinking. additionally, we are accountable to the people ’

- lived interruptions in our information infrastructure. in early 1996, a major winter storm paralyzed large portions of the country. commerce ground to a halt for up to a week in some areas but activity bounced back rapidly once the roads were cleared again. although individual firms and households were adversely affected by these disruptions, in the aggregate, the economy quickly recovered most of the output lost due to the storm. in this instance, the shock to our physical infrastructure was transitory in nature, and, critically, the recovery process was under way before any adverse “ feedback ” effects were produced. last year ’ s strike by workers at the united parcel service is a second example. ups is a major player in the package delivery industry in this country, and the strike disrupted the shipping patterns of many businesses. some sales were lost, but in most instances alternative shipping services were found for high - priority packages. some businesses were hurt by the strike, but its effect on economic activity was small in the aggregate. obviously an important element in any forecast for the year 2000 is the degree to which the failure of the computer system at one institution causes ripple effects on the systems of others. if the disruptions that occur are not isolated events, as i have assumed, but spread across key sectors of the economy by interacting with each other, then an outright decline in real gdp in the first quarter of 2000 could be a plausible outcome. the more dire of the y2k scenarios would involve, among other things, a perpetuation and intensification of these feedback effects. in such an event, production disruptions could turn out to be a national or international phenomenon and could spread from one industry to another. under these circumstances, the decline in economic activity would prove to be longer lasting, and a recession - typically defined as a decline in real gross domestic product in two consecutive quarters - could ensue. but let me quickly stress that i do not think this recession scenario has a very high probability. it is possible, but a lot of things have to go wrong for it to occur, and much is being done to prevent its occurrence. what can monetary policy do about the millenium bug? what can monetary policy do to offset any y2k disruptions? the truthful answer is “ not much ”. just as we were not able to plow the streets in 1996 or deliver packages in 1997, the central bank will be unable to reprogram the nation ’ s computers for the year 2000.