Feds Powell says prices are unlikely to change as long as growth continues

The Federal Reserve is unlikely to adjust interest rates at any time as long as the economy is on its way, Central Bank Chairman Jerome Powell told Congress Wednesday.

In comments he made to the Joint Economic Committee, Powell reiterated an attitude he described a few weeks ago that the Fed's move this year toward more accommodative monetary policy has helped support an economy that is continuing to grow. He noted that Fed moves tend to have a delayed effect, which means that it will take time to assess their impact.

"We view the current stance of monetary policy as likely to remain appropriate as long as incoming information on the economy remains broadly in line with our outlook for moderate economic growth, a strong labor market and inflation close to our symmetrical target of 2 percent," he said. he in prepared remarks.

The Fed has reduced the benchmark price three times this year to the current target range from 1[ads1].5 to 1.75%. While the inflated fund rate specifically sets the rates that banks charge each other for very short-term lending, they are also linked to several forms of consumer debt.

After the Federal Open Market Committee meeting late last month, Powell said he sees finances as "being in a good place" and probably doesn't need more stimulation if the data remains consistent.

"Looking ahead, my colleagues and I see a sustained expansion of economic activity, a strong labor market and inflation close to our symmetrical 2 percent objective as most likely, he said in his comments Wednesday." This favorable baseline partially reflects the political adjustments we have made to support the economy. "

Inflation Alerts

As he has several times before, Powell warned that there are still challenges, such as weakness abroad, trade tensions and low inflation.

More officials has recently placed particular emphasis on inflation that remains below the Fed's 2% target, for example, Minneapolis Fed President Neel Kashkari has said the Fed should announce that it will not increase until inflation is at target, Chicago's Charles Evans went even further, saying that the Fed should state that it would be OK if the level ran a little hotter than 2%. Both officials made the comments in CNBC interviews.

Powell for his Part has also said that inflation had to rise significantly before he would consider a rise in interest rates. He said Wednesday that decision makers will continue to consider what needs to be done.

Powell said that the labor market remains strong, revenues are increasing and consumer confidence continues to grow.

"We will monitor the effects of our political actions along with other outlook information as we assess the proper trajectory in the federal fund's target range," he said. "Of course, if a trend emerges that will result in a substantial reassessment of our outlook, we would respond accordingly. The policy is not on a pre-set course. "

On other issues, Powell picked up the repo market in mid-September, where banks go to swap ultra-safe assets against reserves. The Fed responded to a cash crunch by opening a series of temporary and long-term market operations that have pumped billions into the system.

Powell called the operations "technical measures" that did not reflect a change in monetary policy, although the moves have led to a $ 270 billion expansion in the Fed balance sheet.

He reiterated also that fiscal policy is on an unsustainable path and may limit the ability to respond to a financial downturn.

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