WASHINGTON — The Latest on Federal Reserve Chairman Jerome Powell’s testimony before the Joint Economic Committee about the outlook for the U.S. economy (all times local):
Federal Reserve Chairman Jerome Powell says that the unemployment rate, already near a 50-year low, could drop further without necessarily igniting higher inflation.
“The data is not sending any signal that the
Historically, super-low unemployment has been seen as likely to push up inflation, as workers push for higher pay and companies offer greater salaries to find and keep workers. Powell’s optimism about unemployment and inflation suggest that the Fed is unlikely to feel any need to raise rates anytime soon.
Private economists say Federal Reserve Chairman Jerome Powell is sending a strong signal that the central bank is not planning further interest rate cuts unless the economy weakens.
Sal Guatieri, a senior economist at BMO Economics, says Powell “stayed true to the patience script” by indicating that that the Fed’s key policy rate is likely to remain unchanged for an extended period unless economic risks increase.
Andrew Hunter, senior U.S. economist at Capital Economics, said Powell’s testimony on Wednesday indicated that a rate cut at the Fed’s next meeting in December was unlikely. Hunter said he believed Fed officials have been encouraged by more hopeful news on the US-China trade talks.
The Fed has cut interest rates three times so far this year.
Powell says in written testimony that the Federal Reserve is optimistic about the U.S. economy, though it still faces risks from slower growth overseas and trade tensions.
“Looking ahead, my colleagues and I see a sustained expansion of economic activity, a strong
Powell also says the Fed is likely to keep its benchmark short-term interest rate unchanged in the coming months, unless the economy slows enough to cause Fed policymakers to make a “material reassessment” of their outlook.
Federal Reserve Chairman Jerome Powell is due to testify Wednesday in Congress about the outlook for the U.S. economy, giving his perspective two weeks after the Fed cut interest rates for a third time this year.
The three cuts, which lowered the interest rate the Fed controls to a range of 1.5% to 1.75%, were intended to offset drags from slower global growth and the U.S.-China trade war.
The Associated Press