The U.S. economy is in a 'favorable place' and the Federal Reserve wil...
JACKSON HOLE, Wyo. - The U.S. economy is in a “favorable place” and the Federal Reserve will “act as appropriate” to keep the current economic expansion on track, Fed chair Jerome Powell said on Friday in remarks that gave few clues about whether the central bank will cut interest rates at its next meeting or not.
But “the U.S. economy has continued to perform well overall,” Powell said in keynote remarks at an annual Fed economic symposium at this mountain retreat. “Business investment and manufacturing have weakened, but solid job growth and rising wages have been driving robust consumption and supporting moderate overall growth.”
Between that, the possibility of a hard “Brexit,” tension in Hong Kong, an economic slowdown in places like Germany and other overseas troubles, Powell said the Fed needed to “look through” short-term turbulence and focus on how the United States is performing.But the overall tone of his statement may disappoint investors expecting the Fed to cut rates at its September meeting and possibly several more times this year.
The Fed must “look through what may be passing events, focus on how trade developments are affecting the outlook, and adjust policy to promote our objectives” of 2% inflation and strong employment.No matter what course Powell chooses, it is clear from the minutes of the Fed’s most recent meeting released Wednesday and from the range of comments from policymakers also in attendance here that he lacks a broad consensus among his colleagues about the appropriate course of action.
Bullard, who has long advocated for lower rates to address the persistent shortfall in inflation, said he is troubled by signs of a slowdown coming from the bond market - a so-called “inversion” of the Treasury yield curve that has stood as a reliable precursor to U.S. recessions.
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