U.S. Federal Reserve chairman Jerome Powell on Tuesday flagged openness to furth...
DENVER - U.S. Federal Reserve chairman Jerome Powell on Tuesday flagged openness to further rate cuts amid global economic risks, and said the time to allow the Fed’s asset holdings to begin to expand again “is now upon us” in order to ensure money markets function smoothly.
“It seems that Powell is trying to, in a soft way, demonstrate to the market that the Fed continues to be aware of the downside risks and is actively willing to support the economic expansion as needed,” said Jason Ware, chief investment officer at Albion Financial Group in Salt Lake City, Utah. In his comments here to the National Association for Business Economics, Powell did not commit to further rate cuts, and noted that the economic outlook remained “favorable” and continued growth “most likely.” But he noted that over the course of the past year central bank officials “have shifted our views about appropriate monetary policy toward a lower path for the federal funds rate,” and already reduced rates by half a percentage point.
At the Fed’s last meeting 7 of 17 policymakers indicated they felt rates would likely need to be reduced by another quarter of a percentage point by the end of the year, and markets have priced in such a move.Much of Powell’s speech centered on how a “data dependent” Fed sometimes struggled to be sure it has statistics that accurately inform it about the state of the economy.
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