Fed’s Powell: Years of strong jobs, low inflation still ahead
WASHINGTON: Federal Reserve Chairman Jerome Powell said he sees the United States on track for years more of steady growth, but was challenged in a congressional hearing by senators worried the Trump administration’s trade policies were already damaging businesses in their districts.
Powell in written testimony to the Senate Banking Committee and in his response to questions about a possible “trade war” largely discounted the risks and said there would be a positive outcome if the administration’s bargaining ultimately produced a world of lower tariffs.
But North Dakota Democrat Heidi Heitkamp said she was becoming frustrated with the idea of “short-term pain for long-term gain,” noting that the energy sector in her state already had been hit by higher steel prices because of import tariffs and farmers were worried about permanently losing market share because of retaliatory levies imposed on their goods.
While Powell steered clear of direct criticism of President Donald Trump’s slapping of tariffs on goods, particularly from China but also from US allies in Europe and elsewhere, he acknowledged that tariffs were “absolutely” the wrong approach and said the United States “would feel it at the national level” if levies remained in place for too long. The Fed’s regional bank presidents have increasingly cited local business concerns about the administration’s trade tactics, with higher input costs and uncertainty over the future offsetting the recent corporate tax cut and pushing firms to reconsider or delay investment plans.
The back and forth over trade was a chief point of friction in a Fed appearance that also saw Democrats challenge recent Fed decisions that seem to take a lighter hand in the oversight of major banks, while, in contrast, one Republican said the current positive economy and Powell’s presence at the Fed had made the central bank “boring” to oversee.