By Jerry Kronenberg
PROVIDENCE, R.I. (MaceNews) – Federal Reserve Chairman Jerome Powell said Monday that the U.S. economy’s “glass” is “much more than half full – [and] with the right policies, we can fill it further.”
“Monetary policy is now well positioned to support a strong labor market and return inflation decisively to our symmetric 2 percent objective,” Powell told the Greater Providence Chamber of Commerce. But he added, “if the outlook changes materially, policy will change as well.”
Powell said he and other Fed members have been on a “Fed Listens” tour recently, speaking with local businesses and workers around the country to gauge U.S. economic strength. He said the public’s comments confirm “as this expansion continues into its 11th year – the longest in U.S. history – economic conditions are generally good.”
But the central-bank chief added that “the benefits of the long expansion are only now reaching many communities and there is plenty of room to build on the impressive gains achieved so far. Fortunately, the outlook for further progress is good. Forecasters are generally predicting continued growth, a strong job market and inflation near 2 percent.”
However, Powell added that the Fed does see some risks, including:
- Trade. “Business contacts around the country have been telling us that trade-related uncertainties are weighing on their decisions. These global developments have been holding back overall economic growth.”
- Manufacturing. Powell said that U.S. manufacturing output only recently surpassed its pre-recession levels and has since declined this year. He added that business investment “has also weakened.”
- Inflation. The Fed chief noted that U.S. core inflation has “unexpectedly” remained below the Fed’s target 2 percent. “We have seen that inflation running persistently below target can lead to an unhealthy dynamic,” Powell said. “We are strongly committed to symmetrically and sustainably achieving our 2 percent inflation objective.”
Still, the central banker said, “we see the current stance of monetary policy as likely to remain appropriate as long as incoming information about the economy remains broadly consistent with our outlook of moderate economic growth, a strong labor market and inflation near [the Fed’s] objective. Of course, if developments emerge that cause a material reassessment of our outlook, we would respond accordingly. Policy is not on a pre-set course.”