Fed’s ‘good place’ US economy heads for congressional review

WASHINGTON: Federal Reserve Chairman Jerome Powell takes his upbeat view of the US economy to Capitol Hill, with markets and many of Powell’s colleagues expecting two more interest rate increases this year amid a continued economic expansion.

The Fed chair’s semi-annual congressional testimony on monetary policy rarely breaks new ground, typically reviewing the Fed’s recent policy statements and economic forecasts and allowing lawmakers to question the Fed chair about specific issues.

The appearances have ranged from testy to civil under prior chairs, but Powell, appointed by President Donald Trump and confirmed by the Republicancontrolled Senate earlier this year, has made improved relations with Congress a priority.

He is expected to face particular grilling before the Senate Banking Committee on Tuesday by Democrats likely to zero in on the Fed’s lighter-touch approach to regulation.

The Fed recently granted ‘conditional’ approval to the capital plans of Goldman Sachs and Morgan Stanley, for example, even though they technically fell below minimum Fed thresholds during the central bank’s annual stress tests.

However, the formal report that Powell will be presenting, released by the Fed last week, held to the Fed’s core view that coming months will see the United States stick to a lane of steady growth, low unemployment and stability in the financial sector.

“I think the economy is in a really good place,” Powell said in a broadcast interview late last week, with growth likely to remain above trend for the time being and low unemployment expected to filter more forcefully into higher wages.

Powell will appear before the House Financial Services Committee on Wednesday in a second day of testimony.

Onesournote:TheInternational Monetary Fund on Monday cautioned that the global recovery may be slowing, and warned specifically that a developing tariff war between the United State and other large global economies could lop half a trillion dollars off of global growth by 2020. — Reuters