A+ A-

Fed Chief says US economy strong, not at risk of "overheating"

WASHINGTON, Aug 24 (KUNA) -- US Federal Reserve chairman Jerome Powell on Friday said the US central bank will do " whatever it takes" to head off inflation as it continues to gradually raise interest rates.
In a speech at the annual gathering of leading economists and central bankers in Wyoming, Powell noted the American economy "is strong. Inflation is near our two percent objective, and most people who want a job are finding one." He indicated that the Fed's plan to slowly raise interest rates will continue despite criticism from President Donald Trump who says the strategy might undermine the nation's economic growth.
"My colleagues and I are carefully monitoring incoming data, and we are setting policy to do what monetary policy can do to support continued growth, a strong labor market, and inflation near two percent," he said.
He rejected fears that inflation might be accelerating beyond the level the Fed seeks.The rate now is at a target between 1.7 percent and two percent, well above the near-zero level the Fed kept it at from late 2008 to 2015 but still historically low.
"While inflation has recently moved up near two percent, we have seen no clear sign of an acceleration above two percent, and there does not seem to be an elevated risk of overheating." The central bank's officials have signaled two more small hikes are expected this year to try to prevent a jump in inflation that can come when borrowing costs are low in a growing economy.
Powell noted the Fed was trying to balance two risks in its decisions on interest rates: "moving too fast and needlessly shortening the expansion, versus moving too slowly and risking a destabilizing overheating." Fed officials at the meeting warned US trade disputes with China and other countries created "an important source of uncertainty and risks." The warning came just as US and Chinese officials began talks in Washington to try to defuse the spiraling disagreement, with a new round of punitive tariffs on USD 16 billion in goods from each country just hours away.
The US has imposed tariffs on hundreds of products, mostly from China, and Fed officials said they are seeing the impact of trade disputes on the ground, as businesses across the country face higher prices for necessary inputs and the uncertainty has caused some to delay investments. (end) hy.bs