Federal Reserve Chairman Jerome Powell will testify on Wednesday before the Congress on the outlook for the US economy, giving his view two weeks after the Fed cut interest rates for the third time this year.
The Fed said after its October 29-30 meeting that it is likely to stop further cuts if the economy remains in good shape and inflation approaches the central bank’s target of 2%. The three cuts, which cut the Federal Reserve’s interest rate to 1.5 per cent, were intended to compensate for slowing global growth and the US-China trade war.
Powell is scheduled to appear on Wednesday before the Joint Economic Committee of Congress. He and other federal officials believe the cuts are working, as lower borrowing costs have encouraged more Americans to buy homes and electronic devices.
Wider measures of the economy suggest that growth remains strong if not spectacular. The unemployment rate is near its biggest 50-year low of 3.6 per cent, and employment is strong enough to push the rate lower. According to the Fed’s preferred measure, inflation is only 1.3 per cent, although most federal officials expect it to rise in the coming months.
Several Fed officials in public comments this month expressed support for the Fed’s policy and expressed confidence in the economy. “If the economy continues to perform as we expect, the Fed is likely to cut rates,” Minneapolis Fed President Neil Kashkari said in a television interview last week.
New York Federal Reserve Chairman John Williams and several other Fed officials said last week that the three cuts had left the benchmark interest rate low enough to support growth. Most analysts predict the Fed will achieve steady rates when it meets next month. But some economists expect growth to slow in the coming months and the Fed is likely to halt cuts next year.