Fed's Powell says 'no rush' to hike rates in 'solid' but slowing economy
The Federal Reserve is in “no rush to make a judgment” about further changes to interest rates, Fed Chairman Jerome Powell told U.S. lawmakers on Tuesday as he spelled out the central bank’s approach to an economy that is likely slowing.In two hours of testimony to the Senate Banking Committee, Powell elaborated on the “conflicting signals” the Fed has tried to decipher in recent weeks, including disappointing data on retail sales and other aspects of the economy that contrast with steady hiring, wage growth, and ongoing low unemployment.If anything, Powell’s comments solidified a Fed policy shift last month in which it indicated it would pause a three-year cycle of rate hikes, which had been projected to run well into 2020, until the inflation or growth dynamics change.The flow of new workers into the labor force, for example, has surprised the central bank and means “there is more room to grow,” Powell said.
https://www.reuters.com/article/us-usa-fed-powell/feds-powell-says-no-rush-to-hike-rates-in-solid-but-slowing-economy-idUSKCN1QF1UB
2 comments:
The Fed Chair I think has made a relatively wise choice in pausing the cycle of rate hikes given the mixed signals the economy is giving. Being too hawkish on rates may be problematic and as such lead to a recession. However I am interested in seeing how the central bank will deal with its policy of quantitative tightening.
Greg, I agree with your comment on the Fed Chair making a wise choice to pause the rate hikes. When they continue to raise rates, which they eventually will, how do you think they will? Will it be a continuous 0.25 hike each time they chose to do so like we've seen over the last year? Could it be more aggressive, depending on the state of the economy? If they move to quickly, which is what we saw in 2008, could it end up hurting the economy immensely? I'm interested to see how he chooses to attack this.
Post a Comment