The Federal Reserve is unlikely to adjust interest rates anytime soon as long as the economy stays on track, Central Bank Chairman Jerome Powell told Congress on Wednesday.
In a comment provided to the Joint Economic Committee, Powell reiterated a position he noted a few weeks ago that the Fed's moves toward more prudent monetary policy this year have helped support an economy that continues to grow. He noted that the Fed's movements tend to slow down, which means it will take time to evaluate what impact they have.
"We see that the current monetary policy stance is likely to remain appropriate, while the input to the economy remains broadly consistent with our prospects for moderate economic growth, a strong labor market and inflation near our 2 percent symmetric target , "he said in a prepared note.
The Fed has cut its reference rate three times this year to its current target range of 1
Following a meeting of the Federal Open Market Committee late last month, Powell said he saw the economy as "in a good place" and was unlikely to need it
"Looking ahead, my colleagues and I see a steady increase in economic activity, a strong labor market and inflation near our symmetrical 2 percent target as most likely," he said in his remarks on Wednesday. "This favorable baseline reflects in part the policy adjustments we have made to support the economy."
As many times before, Powell warned that challenges remain, such as weakness abroad, trade tensions and low inflation.
Recently, several employees have placed particular emphasis on inflation, which remains below 2% of the Fed's target. Minneapolis Federal Republican President Neil Kashkari, for example, said the Fed must publicly declare that it will not rise until inflation is firmly in the target. Chicago Evans from Chicago went even further, saying that the Fed should express that it would be good if the level rose slightly above 2%. Both officials made comments in interviews with CNBC.
For his part, Powell also stated that inflation would need to rise significantly before considering a rate hike. He said Wednesday that policymakers will continue to evaluate what needs to be done.
Powell said that the labor market remains strong, incomes are increasing and consumer confidence continues to grow.
"We will monitor the effects of our political actions, along with other perspective-relevant information, as we evaluate the appropriate path of the federal funds target target range," he said. "Of course, if there are developments that lead to a major review of our prospects, we would respond accordingly. The policy is not a pre-determined course."
On other topics, Powell turned to the mid-September outbreak of the repo market. , where banks go to exchange super-safe assets for reserves. The Fed has responded to the monetary crisis by opening a series of temporary and long-term market operations that pumped billions into the system.
Powell called operations "technical measures" that did not reflect a change in monetary policy. this move led to an increase of $ 270 billion in the Fed's balance sheet.
He also reiterates that fiscal policy is an unsustainable path and may limit the ability to respond to an economic downturn.