Friday, 18 January, 2019

Powell: Fed can be patient as United States economy evolves in 2019

Is it time to invest in gold US official warns of recession risk if interest rates go much higher
Nellie Chapman | 11 January, 2019, 14:26

While most previous shutdowns have been fairly short and have not affected the economy in the aggregate, Mr Powell said, "if we have an extended shutdown, I think that would show up in the data pretty clearly". "You should anticipate that we're going to be patient and watching, and waiting and seeing".

"I'm very anxious about it", the Fed chief told participants of The Economic Club of Washington, DC on Thursday. Yesterday the Australian share market closed 0.3 per cent higher or 17 points higher at 5,795.

"If we find that the ongoing program of balance sheet normalization or any other aspect of normalization no longer promotes the achievement of our dual-mandate goals, we will not hesitate to make changes, " Clarida said. He said he didn't know the exact level.

Powell said that he had never met Trump before he was interviewed by the president in late 2017 for the Fed chairman's job. He simply reiterated the message from the latest FOMC minutes that policy makers regard the economic outlook as solid, despite intensifying downside risks.

The Fed chair will be taking questions in what will be his first major comments since the central bank took a decidedly more cautious tone about its future pace of interest rate hikes. The Fed's communications - and a Bloomberg News report that President Donald Trump had discussed firing Powell - helping bring on the worst December for stocks since the Great Depression.

Since the meeting, Fed officials have indicated they're less inclined to keep raising than their statement and projections for hikes in 2019 had suggested.

But Fed Chairman Jerome Powell also sought to reassure financial markets last week, saying policymakers will be "patient" before making any further moves as they watch to see how the economy evolves and could react quickly to any changes.

In that appearance Powell emphasized the Fed's flexibility and patience in evaluating data, easing expectations of steady rate hikes in a message amplified by a half dozen other Fed officials in recent days.

The monthly reductions, effectively running on autopilot, have been criticized by some as a steady tightening of financial conditions the Fed should reconsider. Markets have expressed concerns that the Fed's operations to reduce the balance sheet could be depressing the markets and ultimately slow growth.

"Growth prospects in other economies around the world have moderated somewhat in recent months, and overall financial conditions have tightened materially, " he said in the text of a speech late Thursday in NY.