US Federal Reserve chair Jerome Powell speaks at Economic Club
The Fed chair recently spoke about the US and global economies at the Economic Club in Washington, D.C.
US Federal Reserve chair, Jerome Powell, recently spoke at the Economic Club in Washington, D.C. He made dovish comments about Fed policy and the stock market.
Why Powell may be softening on Fed policy
The Fed chair may be dovish on interest rates because of the last interest rate hike affecting the US stock market. Though the Federal Reserve was likely to increase interest rates twice in 2019, there may be a change in those plans. After signals that the US central bank may delay rate hikes, Powell is likely to base interest rate policy on the developments on Wall Street. He said during a question-and-answer period at the Economic Club that,'We're [The Fed] waiting and watching to see what happens.'
Powell speaks about US markets, government shutdown, Chinese economy
The Federal Reserve raised interest rates in 2018 because the bank felt the economy was strong. However, the volatility of the stock market in recent months has led to speculation that the Fed may delay rate hikes, especially if the US economy slows down. Powell was asked about how the US government shutdown could affect the overall economy. He said that a prolonged government stoppage could eventually show up in US economic data.
'In the short term, government shutdowns don't last very long. They typically have not left much a market on the economy, which isn't to say, there's plenty of personal hardships that people undergo. If we have an extended shutdown, I do think that would show up in the data pretty clear,' said Powell.
Powell also noted that the slowdown in Apple iPhone sales in China means that the Asian nation's economy is in a downturn. He also spoke about how the slowdown there could be part of a global problem.
'The principal worry I would have is really global growth. If you look at Asia, Europe, you're seeing slowing in growth. The question would be how does that affect us.It's a tightly integrated global economy, global markets, and we will feel that,' said the Fed chair.
Fed chair expresses concern about debt
Powell spoke about the growing US government debt and how it could affect the US economy.
'I'm very worried about it. From the Fed's standpoint, we're really looking at a business cycle length: that's our frame of reference. The long-run fiscal, non-sustainability of the U.S. federal government isn't really something that plays into the medium-term that is relevant for our policy decisions', said Powell.
This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.
Live prices on most popular markets
You might be interested in…
Find out what charges your trades could incur with our transparent fee structure.
Discover why so many clients choose us, and what makes us a world-leading provider of spread betting and CFDs.
Stay on top of upcoming market-moving events with our customisable economic calendar.