Federal Reserve Chairman Jerome Powell said Thursday the central bank won’t be distracted by political criticism as it moves interest rates higher to try to bring inflation down.
“I can also assure you that we never take into consideration external political considerations,” Powell said, during a moderated discussion at a Cato Institute monetary conference.
As the Fed moves interest rates higher, he has had the support of President Joe Biden. But progressive Democrats, including Sen. Elizabeth Warren, Democrat of Massachusetts, have argued that rate hikes are the wrong medicine for high inflation and will cause too much unemployment.
Criticism of the Fed will likely increase if the economy slips into recession.
In a speech two weeks ago at th e Fed’s summer gathering in Jackson Hole, Powell said that the central bank’s next phase of rate hikes is likely to lead to subpar growth and pain.
Read: What happens next now that Jackson Hole is over?
In other remarks at Cato, Powell said the Fed accepts its responsibility for price stability, which is 2% inflation over time.
The longer that inflation remains well above target, the greater the risk that the public begins to see higher inflation as the norm, Powell said.
That makes the costs of getting inflation down higher, he said.
“I can assure you that my colleagues and I are strongly committed to this project and we will keep at it until the job is done,” Powell said.
The Fed chairman didn’t comment on the debate in financial markets over whether the central bank will raise rates by the ultra-large 0.75 percentage point for the third straight meeting on Sept. 21 or downshift to a still-large half percentage point hike.
Late Wednesday, Goldman Sachs said it now expects a 0.75 percentage point hike on Sept. 21, up from the firm’s prior forecast of a half point increase.
Powell did stress that rates will stay higher for longer.
“History cautions against prematurely loosening policy,” he said.