Powell: Threats From Global Slowdown 11/15 06:23
WASHINGTON (AP) -- Federal Reserve Chairman Jerome Powell said Wednesday
that the U.S. economy is performing well but he's eyeing potential risks ahead.
Those include a slowdown in global growth, the fading impact from tax cuts
and the cumulative weight of the Fed's own interest rate hikes.
Speaking to an audience at the Federal Reserve Bank of Dallas, Powell said
the Fed is managing interest rates in an effort to prolong the current economic
The increased political attacks on the Fed will not divert the central bank
from doing its job, he said. President Donald Trump has called the Fed's rate
hikes his "biggest threat."
The Fed has the tools and the protections it needs to serve the public in a
"non-partisan, professional way," Powell said.
None of Powell's comments indicated the central bank would stray from
expectations that at its December meeting it will hike rates for a fourth time
this year. The Fed left rates unchanged at its meeting last week.
Powell said the Fed is raising rates slowly in an attempt to avoid the
mistake of hiking them either so quickly that it pushes the economy into a
recession, or moving too slowly and allowing inflation to get out of control.
This gradual approach has translated into a total of eight quarter-point
rate hikes since the Fed began raising rates in late 2015. Those came after
seven years in which the Fed kept its key policy rate unchanged near zero in an
effort to lift the country out of the deepest recession since the 1930s.
Those hikes have pushed the Fed's key policy rate to a range of 2 to 2.25
percent. The Fed has signaled that it expects to raise rates one more time this
year and three more times in 2019.
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.
Powell said political criticism would not affect the Fed's policies.
"We have an important job that Congress has assigned. We have the tools to
do it and we have the protections to do it," Powell said.
He also stressed that in his view "our economy is in such a good place right
now," citing low unemployment and strong growth.
Asked what headwinds he saw, Powell said that the current global slowdown is
a concern. He also noted expectations that the strong support the U.S. economy
has received from the $1.5 trillion tax cut Trump pushed through Congress last
December and a big boost in government spending will fade.
That could be happening in the next year or so, he said.
Powell said that the effects of the Fed's gradual but steady rate hikes
could also act to slow growth.
At another point, he was asked about the old Wall Street adage that bull
markets don't die of old age but rather get killed by the Federal Reserve.
Powell said that is not the Fed's aim. He said the central bank is trying to
raise rates in a gradual way in order to extend the current expansion, now the
second longest on record.