Case for raising rates in Dec 'coming together': US Fed nominee
Jerome Powell, nominee to be chairman of the Federal Reserve Board of Governors, testifies during his confirmation hearing before the Senate Banking, Housing and Urban Affairs Committee on Capitol Hill in Washington, DC. (SAUL LOEB/AFP)
WASHINGTON: President Donald Trump's pick to lead the US Federal Reserve said on Tuesday (Nov 28) there is a strong case for raising the benchmark interest rate at the central bank's December policy meeting.In an unusually direct comment for a central banker, Fed governor Jerome Powell told the Senate Banking Committee, "I think that the case for raising interest rates at our next meeting is coming together."While he stressed that the final decision on the key lending rate will be made at the Dec 12-13 monetary policy meeting, and noted the Fed's policy is to avoid definitive statements ahead of those meetings, Powell said "conditions are supportive of doing that."While the statement was a surprise, the opinion was not, as Fed officials have been saying interest rates are expected to rise gradually, and analysts are virtually unanimous in expecting the third rate hike of the year to come next month.While inflation has remained far below the Fed's two percent target, and wage pressures are largely absent, other economic data point to solid growth and unemployment has declined to 4.1 per cent.Trump early this month nominated Powell to replace current Fed chair Janet Yellen, something no first-term US president had done in 40 years.
Yellen, the first woman to lead the Fed, held the post since 2014 and will leave in February after just one term, having overseen a long if moderate US economic recovery.Yellen's departure means Trump will be able to name the majority of the seven Fed board members, allowing him to put his mark on monetary policy and a key US bank regulator.Powell is seen as a centrist choice for the role compared to some of the more problematic choices who were in the running, but also perhaps more favorable to easing tough regulations on banks imposed in the wake of the 2008 financial crisis.In his testimony, he stressed the Fed's ongoing efforts to tailor regulation to ensure it is not overly burdensome, especially on smaller banks.
But he also said the new rules have made the US financial system much more "resilient" than in the run up to the crisis.
Source : http://www.channelnewsasia.com/news/business/case-for-raising-rates-in-dec-coming-together-us-fed-nominee-9449298