The Federal Reserve Chairman Powell testifies that the American economy is in a “strong situation”

Federal Reserve Chairman Jerome Powell He said that the economy is in a “strong situation” where the central bank monitors inflation and labor market data to obtain signs that it needs to control monetary policy.

“Despite the high uncertainty, the economy is in a strong position. The unemployment rate is still low, the labor market in or near the maximum employment,” Powell said in his opening certificate before the House of Representatives Financial Services Committee on Tuesday.

“The inflation has decreased significantly, but it was somewhat more than 2 % longer. We are interested in the dangers of both sides of our double mandate,” the chair said, referring to “Inflation has decreased significantly, but it has somewhat exceeded our 2 % longer goal. Federal Reserve Double mandate to boost stable prices in the long term as well as maximum labor.

The Federal Reserve was affected by reducing interest rates due to uncertainty about commercial policy, as president Donald Trump A tariff was imposed on American commercial partners. Definitions are taxes on imports that the importer pays in general, which often passes or all of these additional costs for consumers.

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“The effects of definitions, among other things, depend on their final level. I expected the expectations of this level, and thus the relevant economic effects, its peak in April and has decreased since then.”

“Nevertheless, this year’s definitions are likely to increase the prices and inhibit economic activity,” he said. “The effects of inflation can be short-term-which reflects a single-time shift in the price level. It can also be Inflationary effects Instead can be more stable. “

He added: “The respondents in consumer polls, companies and professional predictions indicate the customs tariff as the motivation factor. After the next year or so, most of the long -term expectations remain consistent with the target of inflation by 2 %.”

The Federal Reserve Governor breaks the ranks

Powell was asked about when inflation can start from the customs tariff to show himself in the data, and he explained that when he speaks to retailers, he often hears that much of what is currently being sold was in the stock before the customs duties entered.

“We expect the hypertrophy of customs tariffs will appear more, but I want to be honest, and we don’t really know how much it will be transferred to consumers. We not only know until we see it. It may be less than we expected, it can be higher. We have to wait and see somewhat we do,” Powell explained. “

The three interest rate discounts were discussed at the Federal Reserve in the past year-including the reduction in 50-Basis points in September in addition to the discounts at the bus points in November and December-when he asked the legislator whether the conditions are similar now and may lead to a price reduction.

“The unemployment rate actually increased to almost a full percentage – I was very clear about this, we were very clear on this topic in an actual time. There was no experience in the modern era in which the unemployment rate rose to approximately 1 % and did not follow it much higher levels of unemployment and stagnation,” Powell said.

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He pointed out that the rate of federal funds was at a “very restricted level” by 5.3 % and that the federal reserve was the last large central bank that it lower, so the September reduction was aimed at supporting the labor market.

Powell also pointed out that inflation is expected to continue to decline, which contradicts the current expectations that inflation will rise in the coming months.

“If you only look at the basic data and do not look at the prediction, you will say that we would continue to cut. The difference, of course, is at this time, all the foreclosters will soon expect some important inflation of the definitions.” “We cannot ignore it … We just say, let’s wait and see more.”

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