ATLANTA — Federal Reserve Chairman Jerome H. Powell sought to calm frightened traders on Friday, casting the United States financial system as sturdy however promising to alter financial coverage rapidly if world development slows underneath the burden of an ongoing commerce battle.
“I think the markets are pricing in downside risks, is what they’re doing,” Mr. Powell stated at a panel dialogue at an annual assembly of economists right here. “They’re well ahead of the data.” But, he added, “We’re listening carefully to that. We’re listening sensitively to the messages markets are sending.”
The Fed, which has raised rates for five consecutive quarters, has penciled in a further two price hikes for 2019. That has despatched markets swooning, as many analysts and economists fret that the Fed may snuff out the financial growth. Mr. Powell, acknowledging these issues, stated the Fed could be ready to alter if financial circumstances warrant.
“We’re always prepared to shift,” Mr. Powell stated, including the Fed may shift “significantly” if crucial.
Mr. Powell started his remarks by noting a number of indicators of energy within the financial system, together with Friday’s report that the United States added greater than 300,000 jobs in December, effectively above expectations. But he acknowledged weak spot in a current survey of producing exercise, as effectively as issues about development in China and world wide, significantly associated to commerce tensions between America and the Chinese.
The Fed chair additionally famous that if financial circumstances weaken, the Fed could readjust its plan to shrink the extraordinary quantity of help it has supplied to monetary markets within the decade because the monetary disaster.
“We wouldn’t hesitate to make a change” in coverage, he stated.
[U.S. employers added 312,000 jobs last month, capping a yr of strong hiring.]
Mr. Powell known as 2018 “a good year for the United States economy” and stated that financial information recommend “ongoing momentum heading into 2019.” He welcomed the elevated development in wages, reported in Friday’s jobs report, and stated that it “does not raise concerns about too-high inflation” — a sign to markets that the report is unlikely to speed up plans for rate of interest hikes.
He additionally stated that Fed officers could be “patient” as they watch financial developments play out this yr.
Under questioning by Neil Irwin, an economics author at The New York Times, Mr. Powell didn’t rule out assembly with President Trump, who has sharply criticized the chairman and his price selections over the previous yr.
Mr. Powell stated no such assembly has been scheduled, however famous that presidents and Fed chairs have met face-to-face up to now.
Asked if he would resign if Mr. Trump requested him to, Mr. Powell replied merely, “no.”
Mr. Powell went out of his means to reassure Americans that the Fed stays an unbiased physique that might not be affected by strain from the White House.
“People should know that the Fed has a very strong culture around nonpolitical activity,” he stated. “I want the public to be assured that we have a strong culture, it’s not a fragile one, it’s not being disrupted”