Federal Reserve Chairwoman Janet Yellen is doing everything she can to stay above the partisan fray in the era of President Trump.
Yellen’s Tuesday appearance before the Senate Banking Committee marked her first time meeting with lawmakers since Trump took office. And with a flurry of policy proposals and controversies brewing, the Fed chief was careful not to take sides.
It wasn’t easy, as Yellen was peppered with leading questions from both parties who jockeyed to get the economic expert to speak kindly of their preferred policy prescriptions.
“Do you support a border tax or not?” asked Sen. Dean Heller (R-Nev.), who had tried to pin down Yellen on a number of policy fronts.
“I’m not going to tell you,” Yellen responded with a laugh.
Democrats honed in on Yellen’s past support for new rules put in place under the Dodd-Frank financial reform law, seeking to undercut GOP efforts to roll those regulations back.
Republicans, meanwhile, prodded Yellen to acknoweldge that cutting taxes and regulations could boost an economy that is growing, but only slowly.
But Yellen wouldn’t bite, treading carefully in her new status as a rare Obama appointee still serving out her term under Trump. In her prepared testimony, Yellen suggested lawmakers focus their efforts on improving long-term economic growth rather than quick fixes, with an added note of caution about proposals that could bust the budget.
“While it is not my intention to opine on specific tax or spending proposals, I would point to the importance of improving the pace of longer-run economic growth and raising American living standards with policies aimed at improving productivity,” she said. “I would also hope that fiscal policy changes will be consistent with putting U.S. fiscal accounts on a sustainable trajectory.”
Yellen had previously been publicly criticized by Trump, who during the campaign accused her of keeping interest rates artificially lower to benefit then-President Obama.
She did tread very lightly on some contentious issues. In response to questions from Sen. Catherine Cortez Masto (D-Nev.), Yellen did acknowledge that severe steps to restrain immigration could weigh on the economy, as could harsh steps taken against the Mexican economy.
“Our economy is in many ways synchronous with the Mexican economy,” she said.
She also pushed back against GOP questions about pulling back some of the rules put in place under Dodd-Frank. For example, she told Sen. Pat Toomey (R-Pa.) that new bank stress testing procedures that he saw as duplicative were “a cornerstone of our efforts.”
On monetary policy, Yellen stuck to her same fundamental position — that the Fed will be cautious in raising rates further, but sees conditions that likely will warrant future increases in the coming months. She declined to see how quickly the Fed might again act, in part citing the huge amount of uncertainty in Washington as a reason.
With a new president and GOP control of Congress, Yellen said there could be dramatic changes in policy in the months to come. But with the Trump administration just weeks old and no clear sign of what policies may be enacted, she said the Fed is still waiting to see what happens.
“We recognize that there may be significant economic policy changes and that those changes could affect the outlook, we’re very well aware of that,” she said. “We don’t yet have enough clarity on what changes will be put in place to really clearly factor those policy changes into the economic outlook.”