Federal Reserve Chairman Jerome Powell testifies before
the Senate Banking, Housing and Urban Affairs Committee
on monetary policy Tuesday on Capitol Hill in
WASHINGTON — Federal Reserve Chairman Jerome
Powell told Congress on Tuesday the U.S. economy should
keep expanding at a solid, though somewhat slower pace
this year. But he warned of growing risks, including a
global slowdown, volatile financial markets and
uncertainty about U.S. trade policy.
In delivering the Fed’s semiannual monetary report to
Congress, Powell said the Fed will be ‘‘patient’’ in
determining when to boost its benchmark policy rate in
light of the various ‘‘crosscurrents and conflicting
‘‘When I say that we are going to be patient, what that
really means is that we are in no rush to make a
judgment about changes in policy,’’ Powell said in
response to questions from lawmakers on the Senate
The Fed in December indicated it could hike rates two
times this year. But many private economists believe the
Fed will keep rates unchanged until late this year and
may not hike at all.
Andrew Hunter, senior U.S. economist at Capital
Economics, said he believes a slowing economy will
prompt the Fed to leave rates unchanged this year and to
start cutting them next year.
‘‘We think the Fed is already done hiking rates,’’ he
said. ‘‘We expect a further slowdown over the course of
this year to convince the Fed to begin cutting rates by
In his report to Congress, Powell repeated assurances
the Fed has been making since January that it plans to
be patient in deciding the next moves on interest rates.
Financial markets had little reaction to Powell’s
congressional testimony. The Dow Jones Industrial
Average ended the day down 33 points.
In his testimony, Powell said that the economy grew at a
strong pace last year, with employment and inflation
remaining close to the Fed’s goals. He said it appeared
that overall growth was slightly below 3 percent in
2018. The Fed expects 2019 growth to slow somewhat. He
said that while the 35-day partial government shutdown
‘‘created significant hardship for government workers
and many others, the negative effects on the economy are
expected to be fairly modest and to largely unwind over
the next several months.’’
Powell cited a number of factors that could slow growth
have emerged in recent months.
‘‘Financial markets became more volatile toward
year-end, and financial conditions are now less
supportive of growth than they were earlier last year,’’
He noted that growth has slowed in major foreign
economies, including China and Europe, and ‘‘uncertainty
is elevated’’ around major policy issues such as Brexit,
Britain’s proposed exit from the European Union, and
ongoing U.S. trade negotiations with various countries.
Amid the risks, Powell said that the solid increase in
the past year in the proportion of Americans working or
looking for work was very encouraging. Despite the
progress, the labor force participation rate remains
lower in the United States than most other wealthy
nations, he said.
Powell’s Senate testimony will be followed by an
appearance today before the House Financial Services