…not much, if you only read the transcript.
Federal Reserve Chairman Jerome Powell discussed why the central bank held interest rates steady at a 22-year high during a press conference on Wednesday after the Federal Open Market Committee meeting. Subsequent to his prepared remarks, Powell accommodated the pro-forma Q&A session for select members of the press, at which point reporter Scott Horsley, from NPR, followed-up on the Fed’s recent proposal to lower debit transaction fees with, “Last week, you and your colleagues put forward a proposal to lower the cap on [debit-card] swipe fees for comment. Could you just talk a little about the considerations there—what it would mean for merchants, for banks, for consumers?”
As one would expect, the Chairman responded with gravitas, and a sobering acknowledgement of the Fed’s responsibility to govern the debit card transaction fee pursuant to the powers that congress bestowed upon it through the Dodd-Frank Act. Powell also reaffirmed the Fed’s commitment to honor the 90-day comment period so that all interested stakeholders had adequate time to respond.
Upon a straight reading of the presser transcript, published in its entirety by the WSJ later that day, one wouldn’t be faulted for taking the Chairman’s statements at face value.
However, I happened to catch the conference live, and when he mentioned the stakeholders, he tittered a bit. He tittered in a way that would suggest he knew the Fed was going to take heavy fire from payments and banking constituencies over the proposed reduction in fees.
There was just something in his tone of voice.
Along those same lines, and as a believer in the validity of the 7-38-55 rule, there was something about his tone that communicated, also, that regardless of who submits what response during the open comment period, the Fed is going to lower the cap.
Speculation? Absolutely. 100%. Reading too much into his tone? Perhaps. But, if I could bet this one, I’d be all in.
The Fed proactively pushed the proposal. Logically, it’s something it wants to do, thinks it ought to do, or believes it needs to do. Short of a compelling argument to the contrary, from the non-Durbin exempted banks and card network duopoly no less (not exactly stakeholder constituents that evoke much sympathy), what’s a compelling reason not to do so?
Going into an election year with some form of recession looming, and the consumer on a pathway to increasing economic hardship (savings down, delinquencies up, and not yet fully exposed to the more durable effects of a higher interest rate environment), there’s little if any rationale for the Fed to not go forward with its proposal.
