Fed chief sees no change in rate

Chairman forecasts U.S. economy will grow at solid pace.

WASHINGTON — Federal Reserve Chairman Jerome Powell indicated Wednesday the Fed is likely to keep its benchmark short-term interest rate unchanged in the coming months, unless the economy shows signs of worsening.

But for now, in testimony before a congressional panel, Powell expressed optimism about the U.S. economy and said he expects it will grow at a solid pace, though it still faces risks from slower growth overseas and trade tensions.

“Looking ahead, my colleagues and I see a sustained expansion of economic activity, a strong labor market and inflation near our symmetric 2% objective as most likely,” Powell said in testimony before Congress’ Joint Economic Committee.

Fed policymakers are unlikely to cut rates, Powell said, unless the economy slows enough to cause Fed policymakers to make a “material reassessment” of their outlook.

The Fed cut short-term rates last month for the third time this year, to a range of 1.5% to 1.75%.

“It now looks increasingly likely that the Fed will move to the sidelines for an extended period,” Andrew Hunter, an economist at Capital Economics, a forecasting firm, said.

Powell’s testimony comes a day after President Donald Trump took credit for an “economic boom” and attacked the Fed for not cutting interest rates further.

Powell and other Fed officials, however, argue their rate cuts, by lowering borrowing costs on mortgages and other loans, have spurred home sales and boosted the economy.

Powell was asked about negative interest rates, which Trump also called for Tuesday, and responded that they “would certainly not be appropriate in the current environment.”