Fed chief says will do ‘whatever it takes’ for US economy

Avoids direct reference to President Trump's criticism

WASHINGTON: Avoiding any direct reference to President Donald Trump's renewed criticism of the Federal Reserve's handling of the economy, Fed chief Jerome Powell said the central bank would do "whatever it takes" to head off inflation or react to a new crisis.

Trump's latest attacks, delivered in an interview this week, meant politics cast a shadow over the highly anticipated speech, the highlight of the annual gathering of global central bankers in Jackson Hole, Wyoming, an idyllic setting in the American West for serious discussions on how to manage the economy.

In an address, Powell stayed resolutely focused on the policy debate and the challenges facing the Fed's rate-setting Federal Open Market Committee (FOMC) and made it clear officials were focused on the economic data.



"I am confident that the FOMC would resolutely 'do whatever it takes' should inflation expectations drift materially up or down or should crisis again threaten," he said in prepared remarks.

However, he noted the US economy remained strong and anyone who wanted a job could find one, while prices were rising at about the Fed's target pace of two percent.

And "we have seen no clear sign of an acceleration above two percent, and there does not seem to be an elevated risk of overheating."

As a result, "if the strong growth in income and jobs continues, further gradual increases in the target range for the federal funds rate will likely be appropriate," Powell said, echoing recent FOMC statements.

As the US economy has recovered, the Fed has raised the benchmark lending rate seven times since December 2015, twice this year under Powell, and is expected to hike again in September and December.

But Trump has said rising interest rates -- which tends to strengthen the dollar, making US exports more expensive -- will slow the economy and offset the impact of the tax cuts he championed.

Trump has repeatedly said he is "not thrilled" with Powell's raising of interest rates.



The president has also repeatedly hammered away at Fed policy for not supporting faster economic growth but he went even further this week when he declined to confirm his support for the central bank's independence, something that has the potential to worry financial markets.

Published in The Express Tribune, August 25^th, 2018.

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