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Fed chairman defends steady interest rate hikes

Federal Reserve Chairman Jerome Powell says he sees no sign that the US economy is overheating.And al...

Posted: Aug 24, 2018 5:59 PM
Updated: Aug 24, 2018 5:59 PM

Federal Reserve Chairman Jerome Powell says he sees no sign that the US economy is overheating.

And although prices are rising, Powell said there is no indication inflation will speed out of control.

"We have seen no clear signs of an acceleration above 2%, and there does not seem to be an elevated risk of overheating," Powell said in prepared remarks for a speech in Jackson Hole, Wyoming. "This is good news."

The Fed has been trying to strike a balance: It wants to raise interest rates steadily to keep the economy from overheating, but raising rates too quickly could help start a recession.

For now, the chairman has maintained that gradual interest-rate increases are the best way to balance those risks.

The US economy hasn't been this healthy since the financial crisis. Unemployment is historically low and expected to decline further. Wage growth is starting to pick up. And inflation is finally at the level the Fed considers healthy for the economy.

"The economy is strong," Powell said. "And most people who want a job are finding one."

The speech was the first time the Fed chairman has spoken publicly since President Donald Trump renewed his criticism of the central bank for raising rates.

The Fed chairman did not address those attacks, but instead argued in favor of staying the course.

"If the strong growth in income and jobs continues, further gradual increases... will likely be appropriate," Powell said.

Since Trump took office, the Fed has raised rates five times, including twice this year under Powell. Two more rate hikes are expected in 2018, and the Fed has penciled in three more in 2019.

Powell reassured investors that the Fed would be prepared to do "whatever it takes" should inflation start to pick up.

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Kane60062816
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Indiana Coronavirus Cases

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Cases: 767409

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CountyCasesDeaths
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Jay202932
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