Fed's Powell: There is significant risks to economic outlook

Author: Greg Michalowski | Category: Central Banks

Speaking in Switzerland

SNBs Jordan, Feds Powell and moderator.
  • there is significant risk to economic outlook
  • outlook is for moderate growth, strong labor market
  • US economic outlook remains favorable
  • US economy is in a good place
  • US manufacturing, trade sideways to slightly down
  • 2019 growth likely from 2% to 2.5%, driven by consumers
  • latest nonfarm payroll consistent with good outlook
  • trade policy is weighing on business investment
  • FOMC will continue to act as appropriate
  • Fed will act appropriately to sustain expansion
The early comments are not suggested an aggressive Fed action (i.e. 50 BPS)

More Powell:
  • most likely case for US/ world is moderate growth
  • today's jobs report consistent with solid labor market
  • the Fed has heard quite a bit from companies on uncertainty
  • trade uncertainty means some firms delaying investment
  • Fed is not forecasting or expecting a recession
  • our obligation is to use tools to support the economy
  • we are conducting policy in a way to address risks
  • payroll jobs are well above new labor market entrants
  • Fed is conducting policies that will address the risks that the economy faces
  • There is a new macro economic backdrop which is low inflation, low growth, low rates
  • neutral interest rate down 2 to 3 percentage points in the last 20 years
  • central banks will have less ability to counter a downturn by cutting rates in the future
  • Fed very committed to defending 2% target
  • Fed should not let inflation fall too far below target
  • Fed does not have groupthink mentality
  • asked if politics color decisions Powell responded "absolutely not"
  • electoral politics are absolutely not part of mandate, political factors played no role in decisions
Comments from SNBs Jordan at the same Q&A session
  • sees that global economy slowing down
  • global economy impacting us a lot
  • basis scenario isn't for Swiss recession
  • global economic uncertainty having negative impact
  • we depend on a functioning global economy
The S&P index was at 2980.50 at the start of the session.  
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