Fed's Powell at the Washington Economic Club: Fed waiting, watching and can be patient, flexible

Author: Greg Michalowski | Category: Central Banks

Interview with David Rubenstein


  • financial markets expressing concerns about downside risks
  • inflation is low on under control
  • have the ability to be patient given inflation data
  • labor markets by many measures are very strong
  • Has two rate hikes median in summary of economic projections
  • does not lobby Fed colleagues over policy
  • do not see any evidence of a slowdown
  • markets seem to be pricing and pessimism on growth, trade
  • can move policy flexibly and quickly if economic data warrants it
  • don't see anything showing elevated recession risks
  • government shutdown typically don't last long or it economy
  • no inflation risk that would require the Fed to hit the brakes. Also does not see any financial instabilities that would require the Fed to act
  • principal worry is over global growth, and how much that would impact the US
  • Sees 2019 inflation around 2%
  • strongly anchored inflation expectations a key that asset
  • slowing economy in China is a concern for the US
  • likely baseline for China is another year of solid growth
  • tariffs not had much of a visible mark on US, China
  • if trade dispute leads to lower tariffs it is good
  • we want to return balance sheet to a more normal level
  • worried about extent of US debt in the long run
  • does not know the appropriate level of the Fed balance sheet but it will be "substantially smaller" then it is now
  • unemployment moving down a bit if Fed outlook met
  • Fed is very flexible in adapting policy if economy moves
  • we have a very favorable inflation dynamics

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