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

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

Since then, stock markets endured a topsy-turvy end to the year as the US government shut down and global trade tensions ratcheted higher. It would be up to the Fed to decide how to balance those worries with the signals of a strong economy.

With no sign of excessive inflation or outsized risk in financial markets, Powell said the Fed would be "waiting and watching" in coming months to see which of those two competing "narratives" plays out.

"We are very focused on our job", Powell said.

Powell also repeated his comments that attacks by President Donald Trump on the Fed's rate hike policies were not having an impact on Fed decisions, which he said were aimed at achieving the Fed's two goals of maximum employment and stable prices. "We don't get distracted".

Earlier: Jerome Powell has been moving markets - up and down - lately.

Powell also said he didn't think it would be appropriate to reject an invitation to meet with Trump, but he hasn't yet received such an invitation.

Trump stepped up his criticism of the Fed's string of rate hikes previous year after the market started falling sharply in October.

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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 U.S. economy is solid", Mr. Powell said.

He also said that the Fed had no preset path for rate hikes and would be "patient" when determining whether to hike interest rates further in response to strong USA growth that risks sparking inflation, or to pause rate hikes to account for a global economic slowdown.

U.S. central bankers are refining their message after the hawkish tone of their Dec 19 statement and forecasts for further rate hikes in 2019 roiled financial markets. The Fed cut the rate to nearly zero during the financial crisis but has since raised it to a "neutral" level, meant to neither stimulate nor constrain the economy.

Asked what qualifies for "normal", Powell said "I don't know the exact level."He noted that the balance sheet has declined to about $4 trillion, but that before the 2008 crisis it was below $1 trillion".

Powell's comments on Fed patience were similar to the message in the minutes of the Fed's December meeting as well as the comments of other Fed officials this week.

"Notwithstanding strong economic growth and a low unemployment rate, inflation has surprised to the downside recently, and it is not yet clear that inflation has moved back to 2 percent on a sustainable basis, " Clarida said.

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