At Trump meeting, Fed's Powell stressed monetary policy is data dependent

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Former Reagan Economist Art Laffer on Federal Reserve policy and the outlook for U.S. economic growth.

Federal Reserve Chair Jerome Powell, during an informal dinner with President Trump on Monday night, stressed the importance of economic data in establishing the monetary policy set by the U.S. central bank.

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“[Powell] did not discuss his expectations for monetary policy, except to stress that the path of policy will depend entirely on incoming economic information and what that means for the outlook,” Fed officials said in a statement.

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The meeting followed several months of criticism by Trump of Powell, whom he hand-picked more than a year ago for the job. In late December, Bloomberg reported that Trump was considering firing Powell, after Fed policymakers voted for the fourth time to hike short-term interest rates -- despite pressure from the White House to do otherwise. Treasury Secretary Steven Mnuchin denied the report.

Trump blames the Fed for curtailing economic growth by raising the benchmark federal funds rate.

But during the meeting on Monday -- the first for the duo -- Powell explained that the Federal Open Market Committee will set monetary policy in order to support “maximum employment and stable prices and will make those decisions based solely on careful, objective and non-political analysis.”

It’s also possible that when it comes to interest rate hikes, the president doesn’t have anything to worry about in the year ahead. At the latest policy meeting, Powell signaled a dovish approach to monetary policy in 2019.

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“We’ve been willing to revisit our views, very much willing to revisit our views, of what the natural rate is, and also our understanding of what it is,” he said at the time.

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