The Federal Reserve's Semi-Annual Monetary Policy Report

Digital Assets and Bank RegulationHouse · February 12, 2025 · 119th Congress
The House Financial Services Committee held its statutory hearing on the Federal Reserve's semiannual monetary policy report, with Chairman Jerome Powell as the sole witness. Begins at ▶ 0:24:25
Transcript
Highlights

Title

Powell testifies on interest rates, inflation, tariffs, and bank capital rules

Purpose

The House Financial Services Committee held its statutory hearing on the Federal Reserve's semiannual monetary policy report, with Chairman Jerome Powell as the sole witness. Members questioned Powell on inflation and interest-rate policy, the Fed's ongoing framework review, bank capital rules (including Basel III endgame), Federal Reserve independence amid Trump administration actions on the CFPB and USAID, and the potential economic effects of new tariffs and deportation policy. Begins at▶ 0:24:25

Who spoke

• Chairman French Hill (R-AR)▶ 0:24:25: Opened by saying prices are up 21% since January 2021▶ 0:24:55, criticized the Fed's 2020 flexible average inflation targeting framework as ill-timed▶ 0:25:56, and pressed Powell on Basel III endgame and the vacant Vice Chair for Supervision role▶ 0:44:07.

• Rep. Frank Lucas (R-OK)▶ 0:28:58: Introduced the new Task Force on Monetary Policy, Treasury Market Resilience, and Economic Prosperity, which he chairs▶ 0:28:58; later asked about treasury market structure and the SLR▶ 2:57:03.

• Rep. Juan Vargas (D-CA)▶ 0:29:58: As task force ranking member, said independent central banks outperform politically motivated ones▶ 0:30:28; later thanked outgoing Vice Chair Michael Barr for stepping aside and questioned Powell on the dual mandate's legal basis▶ 2:09:01.

• Rep. Bill Huizenga (R-MI)▶ 0:31:29: Opened with tribute to departing committee counsel Nicole Vasquez▶ 0:31:29; later asked Powell why the Fed operated without a Vice Chair for Supervision for years and whether the position is necessary▶ 0:58:13.

• Chairman Jerome Powell, Federal Reserve▶ 0:33:30: Said the economy is strong, GDP rose 2.5% in 2024, unemployment was 4% in January, and PCE inflation was 2.6% (core 2.8%)▶ 0:34:00▶ 0:36:01; said the Fed cut its policy rate a full percentage point since September and is "not in a hurry" to adjust further▶ 0:36:31; confirmed the monetary policy framework review will conclude by "late summer"▶ 0:38:03; repeatedly said he will not resign if asked and that no single person can fire him▶ 0:49:39▶ 2:12:34.

• Rep. Maxine Waters (D-CA), Ranking Member▶ 0:39:33: Said eggs are up 40% and cost as much as $9/dozen in California▶ 0:40:03; criticized the CFPB shutdown and Musk/DOGE access to consumer data▶ 0:41:35; urged Powell to resist pressure from Trump to cut rates▶ 0:42:36 and raised Trump's executive order banning central bank digital currencies▶ 0:53:41.

• Rep. Bill Huizenga (see above).

• Rep. Brad Sherman (D-CA)▶ 0:59:43: Called Powell "the only bipartisan person left in Washington"▶ 0:59:43; asked about Project 2025's proposal to eliminate the dual mandate▶ 1:00:13 and whether tariffs would raise the CPI, citing Peterson Institute estimates of a 4–7.5 point CPI increase▶ 1:02:14.

• Chairman French Hill (own five minutes)▶ 1:05:16: Asked about balance-sheet policy, the ample reserves framework, and the supplementary leverage ratio (SLR)▶ 1:05:46▶ 1:06:47.

• Rep. Gregory Meeks (D-NY)▶ 1:09:48: Linked USAID cuts to U.S. commercial and agricultural interests and economic stability▶ 1:10:19▶ 1:12:22.

• Rep. Pete Sessions (R-TX)▶ 1:14:54: Asked Powell to explain quantitative easing/tapering, noting the Fed shrank its balance sheet by more than $2 trillion▶ 1:15:25▶ 1:17:25.

• Rep. David Scott (D-GA)▶ 1:19:57: Warned tariffs could be inflationary and asked whether future rate cuts would stem from inflation or a weaker labor market▶ 1:20:27▶ 1:21:58; Powell said the Fed has "no role" in setting tariffs but factors their effects into policy▶ 1:22:59.

• Rep. Ann Wagner (R-MO)▶ 1:25:30: Said the average Missouri household pays about $1,100 more per month due to inflation▶ 1:26:00; pressed Powell on Basel III endgame transparency and stress-test comment periods▶ 1:27:31.

• Rep. Stephen Lynch (D-MA)▶ 1:31:03: Asked about the Senate's "GENIUS Act" crypto framework and firewalls to protect traditional banking from crypto contagion, citing Silicon Valley Bank's collapse▶ 1:31:03▶ 1:34:36.

• Rep. Andy Barr (R-KY)▶ 1:36:06: Asked Powell to commit to scrapping flexible average inflation targeting▶ 1:36:36; said Basel Committee officials conceded Vice Chair Barr's 2023 proposal "gold-plated" capital requirements▶ 1:37:37; noted the U.S. issues about $573 billion in Treasury bonds weekly, more than Australia's entire national debt▶ 1:39:07.

• Rep. Al Green (D-TX)▶ 1:41:40: Praised Powell for "standing up" to the president▶ 1:41:40; questioned the mechanics of tariff collection, arguing tariff revenue could fund tax breaks for wealthy individuals▶ 1:42:10▶ 1:44:12.

• Rep. Roger Williams (R-TX)▶ 1:45:13: Supported the Fed's withdrawal from the Network for Greening the Financial System▶ 1:45:43; asked about regulatory consolidation pressure on community banks▶ 1:47:14.

• Rep. Emanuel Cleaver (D-MO)▶ 1:48:44: Raised concerns about a regulatory gap from the CFPB's dismantling▶ 1:49:15 and asked about small-business adoption of FedNow, noting 64% of small businesses have invoices unpaid over 60 days▶ 1:51:50.

• Rep. Warren Davidson (R-OH)▶ 1:53:51: Challenged Powell on past "transitory" inflation calls and quantity theory of money▶ 1:54:22; questioned the rationale for paying interest on reserves▶ 1:57:23.

• Rep. Erin Houchin (R-IN)▶ 1:59:24: Noted unemployment fell to 3.4% in 2023, a 55-year low, and now sits around 4.1%▶ 1:59:24; asked about DOGE layoffs' effect on roughly 170 million Americans in the labor force▶ 2:03:28.

• Rep. Barry Loudermilk (R-GA)▶ 2:04:26: Raised a DOJ economic espionage prosecution of a senior Fed official accused of sharing information with the Chinese Communist Party▶ 2:05:29; asked about Fed insider-threat programs▶ 2:07:30.

• Rep. Vicente Gonzalez (D-TX)▶ 2:09:31: Asked about the "Pont dei Sospiri" (Bridge of Sighs) as a metaphor for Americans' anxiety▶ 2:11:33; discussed the dual mandate's statutory basis▶ 2:13:04.

• Rep. John Rose (R-TN)▶ 2:14:06: Raised credit risk transfer (CRT) application backlogs▶ 2:14:37 and the Synapse Financial Technologies bankruptcy affecting constituents' funds held via Evolve Bank and Trust▶ 2:16:08.

• Rep. Bill Foster (D-IL)▶ 2:19:10: Asked whether the Fed's Inspector General has been fired or suffered intrusions like Treasury did▶ 2:19:40; discussed renewed "Audit the Fed" calls as an effort to politically micromanage monetary policy▶ 2:21:11.

• Rep. Ralph Norman (R-SC)▶ 2:24:46: Cited federal debt held by the public rising from 64.7% of GDP in 2011 to 99% by end of 2024▶ 2:25:17; asked what debt benchmark would ease his concerns▶ 2:25:47.

• Rep. Sylvia Garcia (D-TX)▶ 2:30:18: Asked whether the Fed would extend FedNow access to non-bank payment providers to lower remittance costs▶ 2:30:49; asked what CPI reading would trigger rate cuts▶ 2:31:19.

• Rep. Erin Houchin (see above, continued Q&A on CPI/rent index)▶ 2:33:20.

• Rep. Andy Ogles (R-TN), Oversight Chair▶ 2:35:21: Raised allegations that the FDIC pressured banks to "debank" crypto companies▶ 2:35:21; asked about DOGE reviewing the Fed's $6 billion budget▶ 2:39:54.

• Rep. Sean Casten (D-IL)▶ 2:40:25: Asked whether Trump administration data scrubbing has limited Fed access to information▶ 2:40:55; questioned climate change as a financial stability threat and California's $250 billion in insurance losses▶ 2:41:25▶ 2:42:25; probed conflicts of interest in privatizing Fannie Mae and Freddie Mac▶ 2:44:26.

• Rep. William Timmons (R-SC)▶ 2:45:57: Pressed Powell on whether stress-test changes were driven by post-Chevron law or unlawful backdoor rulemaking▶ 2:45:57; discussed foreign banks' growing dominance in Treasury market financing▶ 2:47:58.

• Rep. Ayanna Pressley (D-MA)▶ 2:51:00: Entered Boston Fed and Peterson Institute reports on tariffs and deportations into the record▶ 2:51:30▶ 2:52:00; asked whether DOGE accessing Fed systems would help or hurt the economy▶ 2:52:30.

• Rep. Young Kim (R-CA)▶ 2:55:02: Asked whether the productivity boom from AI is sustainable and how it affects inflation forecasting▶ 2:55:32.

• Rep. Ritchie Torres (D-NY)▶ 3:00:05: Asked what would happen if the Fed lost its independence▶ 3:00:36 and whether Powell would grant DOGE staff access to Fed payment systems without vetting▶ 3:01:36.

• Rep. Byron Donalds (R-FL)▶ 3:05:08: Asked why long-term rates haven't fallen despite Fed cuts, citing the "term premium"▶ 3:05:38; linked fiscal deficits to higher borrowing costs▶ 3:07:39.

• Rep. Sylvia Garcia (continued)▶ 3:10:40: Asked about mass deportations' impact on inflation and labor supply, citing a study that immigrants pay $237,000 more in taxes than they receive in benefits▶ 3:11:40.

• Rep. Andrew Garbarino (R-NY)▶ 3:15:44: Cited QuickBooks data showing small-business employment fell 42,000 jobs and New York small-business revenue fell 62%▶ 3:16:14; questioned the Basel III "P-Factor" doubling for securitization▶ 3:18:15.

Key moments

• Powell said hindsight suggests the Fed should have tightened sooner in 2021–22, but cautioned that policy-rule "rules" mid-2024 suggested the policy rate was 200 basis points too high▶ 0:47:38.

• Powell confirmed the Fed intends to repropose Basel III endgame in a capital-neutral manner once new leadership is confirmed at the other banking agencies▶ 0:45:37.

• Waters pressed Powell on CFPB's shutdown eliminating big-bank consumer-law supervision and demanded he confirm DOGE has not accessed Fed systems; Powell said "we've had no contact" and had "nothing to report"▶ 0:50:09.

• Powell reaffirmed he would not resign if asked by the president and that "no single person" can fire him from the Fed▶ 0:49:39▶ 2:12:34.

• Powell said tariffs, immigration, fiscal, and regulatory policy changes together will factor into Fed decisions, but "we can't really take action" until actual policies are known▶ 1:23:29.

• Barr cited Treasury issuance of roughly $573 billion per week — more than Australia's entire national debt — as context for reducing the enhanced supplementary leverage ratio (eSLR)▶ 1:39:07; Powell agreed "it's time to move on the eSLR"▶ 1:40:39.

• Powell disclosed the Fed is aware of a DOJ economic espionage case against a senior Fed employee accused of passing non-public information to Chinese Communist Party representatives, but said he lacked personal knowledge of the facts▶ 2:05:29.

• Green questioned the mechanics of tariff collection, arguing tariffs function as a consumer tax whose revenue could offset tax cuts benefiting wealthy individuals▶ 1:43:11.

• Torres asked Powell whether he would grant unvetted outside teams (referencing DOGE's access elsewhere) entry to Fed payment systems; Powell said no, and described the Fed's careful access controls to guard against cyber risk▶ 3:02:06.

• Norman noted federal debt held by the public rose from 64.7% of GDP in 2011 (when Yellen made a similar warning) to 99% by end of 2024; Powell called the path "unsustainable"▶ 2:25:17▶ 2:25:47.

Metadata

Committee—
Chamber / CongressHouse · 119th Congress
DateFebruary 12, 2025
TypeHearing
Witnesses
The Honorable Jerome Powell — Chairman, Board of Governors of the Federal Reserve System
Videoyoutube
Transcript357 caption blocks · 29,647 words · 3:20:48 runtime
EventCongress.gov 117880