ATLANTA/NEW YORK: Federal Reserve Chairman Jerome Powell sought to ease market concerns that the US central bank was ignoring signs of an economic slowdown, saying he was aware of the risks and would be patient and flexible in policy decisions this year.
Speaking after months of volatility in world bond and stock markets, Powell avoided some of the communication missteps that in the past have roiled rather than calmed investors. He also pledged to stay in his job even if asked to quit by President Donald Trump, who has been critical of him.
Echoing a more sympathetic tone recently espoused by some of his colleagues, Powell said the Fed was “listening” to markets and would balance the steady flow of strong economic data against the array of risks — from slowing global growth to worries about the US-China trade war — that have spooked investors.
The message was heard on Wall Street, where major stock indexes surged about 3.5 per cent to a more than two-week high. The market bounce came after a volatile December sell-off in which traders grew increasingly sceptical of the Fed’s upbeat forecasts and plans to keep hiking interest rates in 2019.
“Particularly with the muted inflation readings that we’ve seen coming in, we will be patient as we watch to see how the economy evolves,” the Federal Reserve Chairman told the American Economic Association in Atlanta.
The Fed, which hiked benchmark US interest rates four times last year including in December, is however not on a preset path and could pause policy tightening as it did in 2016 when global growth concerns led to doubts about the US economic recovery, he said. — Reuters
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