BlockBeats News, May 20th. Over the past seven years, Federal Reserve Chairman Powell has consistently emphasized a theme: the U.S. fiscal path is "unsustainable." This wording has been repeatedly used by him to describe the federal deficit issue. Although he has explicitly stated that the Federal Reserve does not have the authority to set fiscal policy and cannot solve this problem alone, his position has long been well known. The Fed's responsibility is to set monetary policy and regulate the banking system, not to intervene in Washington's fiscal affairs.

"While we are not responsible for fiscal policy, in the long run, fiscal policy will have a significant impact on the economy," Powell said at a press conference in September 2018. At that time, just eight months into his tenure, he was frank: "For a long time, we have been on an unsustainable fiscal path that cannot be avoided. Eventually, we must face reality—and the sooner, the better."

Today, seven years later, Powell still holds this view. On April 16th, he warned, "We are maintaining a huge deficit in a full employment state, which needs to be addressed urgently." On May 7th, he again emphasized that the debt is "heading down an unsustainable path, and Congress must find a way back on track," but added, "This is not something we should be recommending."

After Moody's downgraded the U.S. AAA credit rating last Friday, the fiscal crisis became more urgent. The agency pointed out that if Congress extends Trump's 2017 tax cuts as desired by the Republicans, the deficit will increase by $4 trillion over the next decade. Powell and Trump also disagree on interest rate policy. Trump recently pressured for another rate cut, while the Fed this month maintained the benchmark rate at 4.25%-4.5%. The market expects two rate cuts within the year starting in September. Powell's term will end in May next year, and his board membership will continue until January 2028.