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8/23, 4:01 PM (Source: TeleTrader)
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Powell: Near-zero rates difficult to escape

Rate-setters have a "challenge" how to "sustain the expansion so that the benefits of the strong jobs market extend to more of those still left behind, and so that inflation is centered firmly around 2%," the head of the central bank of the United States said. Chairman Jerome Powell told central bankers and the public on Friday in Jackson Hole of the "heightened risks of lengthy, difficult-to-escape periods" with the benchmark interest rate range "pinned near zero."

At the same time, he urged against not to try and "smooth purely transitory inflation fluctuations." Speaking at a symposium in Wyoming, he vowed to "act as appropriate."

In the balanced keynote speech, the top policymaker pointed to "further evidence of a global slowdown, notably in Germany and China," and attributed it partly to trade friction. He also highlighted Brexit pains, "rising tensions in Hong Kong" and the political crisis in Italy. On the flipside, he claimed the domestic economy's performance remained "well overall" and that price growth "seems to be moving up closer" to target.

"We are examining the monetary policy tools we have used both in calm times and in crisis, and we are asking whether we should expand our toolkit. In addition, we are looking at how we might improve the communication of our policy framework," Powell stressed. He also pointed to historical episodes of Fed's temporary rate cuts before the return to lifting borrowing costs.

Breaking the News / IT