New policies coming to America could take weight off Fed — Powell
CHICAGO: A push by Washington for more business- friendly regulation and fiscal support for the economy could improve US’ mix of policies which in recent years have relied too much on the Federal Reserve, Fed Governor Jerome Powell said.
Powell, speaking at a conference, did not mention the incoming Trump administration by name but his comments suggest some Trump policies will be welcomed by US central bankers who have been urging other institutions to do more to help the economy.
“We may be moving more to a more balanced policy with what sounds like more business-friendly regulation and possibly more fiscal support,” Powell told an economics conference in Chicago.
President- elect Donald Trump, who takes office on January 20, has promised to double US’ pace of economic growth, “rebuild” its infrastructure and slash regulatory burdens.
About half of the Fed’s 17 policymakers factored a fiscal stimulus into their economic forecasts published in December, according to minutes from the Fed’s December policy meeting.
That expected stimulus has led several policymakers to say the Fed will likely raise rates more quickly, but Powell said new policies could also ease the Fed’s burden.
“Monetary policy (might be) able to hand it off and I think that’s a healthier thing,” he said. “We may be moving to a more balanced policy mix.”
Following a Congress- enacted fiscal stimulus during and immediately after the 2007- 09 recession, the Fed in recent years has been widely seen as the economic authority working the hardest to help the economy.
But throughout 2016, Fed policymakers worried publicly that the US economy was stuck in a low growth path and central banking tools could do little to fix this. — Reuters