Fed chief sees potential headwinds to growth, Economy News & Top Stories

Jerome Powell Fed to keep raising benchmark interest rate

Jerome Powell Fed to keep raising benchmark interest rate

Federal Reserve Chairman Jerome Powell said the US economy is strong but could face headwinds next year as policy makers weigh how far and fast to raise interest rates.

"I do believe our economy can grow and grow faster", Mr Powell said.

He did not dispel the notion that rate hikes would continue, saying that in 2019 investors should know that the practice of the Fed only hiking rates quarterly, at meetings where the chair holds a news conference afterwards, will no longer be the case.

"We're not just locked into policy, because that's what we did before", Atlanta Fed President Raphael Bostic said in Madrid on Thursday about alternative frameworks.

He also said the Fed was well aware that the benefits of the economic recovery have not been distributed evenly and that there are pockets of America that have yet to rebound from the recession.

USA central bankers are pursuing a policy of gradualism, with three rate increases so far this year and a fourth pencilled in for next month.

Another vocal critic of the Fed's monetary policy is President Donald Trump, who says rates hikes have hampered his administration's efforts to expand the economy.

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"We are absolutely committed to serving the public in a non-partisan, professional way, in a way that communicates what we're doing and why we're doing it as clearly as possible" Powell said.

"Powell left market players confused with his statement as he emphasised the United States economy was strong but was not sure how long the recovery could last", he added. It also began publishing individual policymakers' anonymous forecasts for future rate hikes and key economic metrics.

During the recent turbulence in stock markets, Trump grew increasingly pointed in his criticism of the Fed's moves, saying they risked undoing his efforts to boost the economy with tax cuts and were not needed because inflation remains low.

Mr Powell's comments highlight the growing complexity the Fed faces as it sets policy.

"We have an important job that Congress has assigned".

He also stressed that in his view "our economy is in such a good place right now", citing low unemployment and strong growth. "We have now a flat yield curve", the founder of Bridgewater Associates said when appearing on CNBC's "Squawk Box" program. Nor does the Fed intend the process to debate whether to change its 2 percent inflation target, or use it to tackle shorter-term questions such as how best to control interest rates or when to stop the current rundown of the central bank's balance sheet.

That could be happening in the next year or so, he said. "Over time the market's going to have to get used to that".

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