Fed's Powell expects 'sustained expansion' of United States economy

Daniel Fowler
November 14, 2019

The central bank has already cut its benchmark rate three times this year to a range of 1.5 percent to 1.75 percent.

"Looking ahead, my colleagues and I see a sustained expansion of economic activity, a strong labor market, and inflation near our symmetric 2% objective as most likely", Powell said in a statement he will deliver to a congressional panel at 11 a.m.

The Fed signalled after its October 29-30 meeting that it would probably hold off on any further cuts as long as the economy stays healthy and inflation moves closer to the central bank's target of 2 per cent.

The US budget deficit - which Mr Powell called "unsustainable" - soared to just under US$1 trillion in the 2019 fiscal year, despite a growing economy and low interest rates. Mr Trump said at the Economic Club of NY. "The data for the USA has suggested that we're not on the edge of falling off a cliff".

"The US economy can operate at a much lower level of unemployment than many would have thought".

The comments suggest that the rate cuts this year weren't entirely about insuring against a global slowdown, but also recalibrating interest costs to an economy where inflation has remained stubbornly low.

However, he noted those types of policies fall under the federal government's purview - not the Federal Reserve. While many presidents may have been unhappy with Fed policy, none have been as vocal about it as Trump. -China trade war, for a slowdown in the US economy as he ramps up his 2020 re-election campaign.

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"We're paying actually high interest".

A downshift in monthly job growth on its own would not qualify, one Fed regional banker said on Tuesday, outlining how the Fed may be forced to explain in the midst of a likely intense presidential campaign why a slowdown in one of the country's most closely watched economic metrics is not necessarily a bad sign.

Powell told lawmakers that politics played no role whatsoever in the Fed's policy decisions, which were based on the analysis of the data, adding that negative rates "would certainly not be appropriate in the current environment".

USA economic data have continued to show strength among households and financial conditions have eased with stocks touching record highs on Wall Street this month. Powell said the Fed expected some easing in the pace of job gains after last year's strong pace.

It also bolstered the Fed's hopes that the consumer will continue to have the staying power to keep the expansion on track in the face of cutbacks by businesses. A gauge of USA manufacturing signaled the sector contracted for a third straight month with the weakest production level since the last recession. It's hard to parse out how much of the slowdown is the natural maturing from double-digit growth to a steadier expansion, versus how much is a cyclical downturn or slower growth as seen in Europe, she said in a Bloomberg Television interview in San Francisco.

-With assistance from William Edwards and Christopher Condon.

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