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The Fed: Ahead of Volcker Rule revamp, Fed’s Powell says central bank independence extends to regulation

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Federal Reserve Board Chairman Jerome Powell

Federal Reserve Chairman Jerome Powell on Friday stated central financial institution independence doesn’t just imply being able to decide interest rates without political interference, but set rules as smartly.

Powell’s remarks, in celebration of the 350th anniversary of Sweden’s Riksbank, comes only a day after President Donald Trump signed into law financial institution deregulation and comes ahead of the Fed’s expected efforts to slash some burdens on banks.

Related: Newly signed financial institution deregulation law units stage for Fed to take additional steps

“While the point of interest is ceaselessly on financial policy independence, analysis suggests that a stage of independence in regulatory and financial steadiness issues improves the stability of the banking device and ends up in higher results,” Powell stated.

Footnotes indicate what Powell intended in particular: “technical implementation and oversight are two areas where tool independence may be particularly useful.”

The Fed is voting subsequent week on proposed changes to the Volcker Rule that bans banks from speculating. The Fed is anticipated to make it more straightforward for giant banks equivalent to Citi C, -1.39%  , Goldman Sachs GS, -Zero.55%   and J.P. Morgan Chase JPM, -Zero.76%  to turn out that market-making activities don’t violate the Volcker Rule prohibition.

Powell’s speech comes an afternoon after the Senate confirmed Jelena McWilliams to lead the Federal Deposit Insurance Corp. McWilliams, formerly a attorney at Fifth Third Bancorp FITB, -1.29%   in addition to a Senate Banking Committee aide, is anticipated to be extra amenable to loosening rules than Martin Gruenberg, her Obama-appointed predecessor.

Steve Goldstein is MarketWatch's Washington bureau chief. Follow him on Twitter @MKTWgoldstein.

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