Fed's Powell: Can be Patient on Rates With Weak Infl -Press

     WASHINGTON (MNI) - Below-target inflation even as the labor market

continues to tighten allows the Federal Reserve to be patient in raising

interest rates again, Fed Gov. Jerome Powell said in an interview Friday. 

     "It's too soon to make decisions about particular meetings and whether to

raise rates but I think we have the ability if we keep getting strong growth and

a strong labor market, we have the ability to be a little bit patient, and

that's not a bad thing," he told CNBC. 

     "Inflation is a little bit below target and it's kind of a mystery. You

would have expected given that we're getting tighter labor markets that you

would have a little bit higher inflation," he said on the sidelines of a Fed

conference in Jackson Hole, Wyo.

     On the other hand, it will be "time soon" to begin the gradual process of

normalizing the Fed's balance sheet, Powell said. 

     "We worked carefully and patiently to put together a plan and we've

circulated that plan and markets have accepted it," Powell said. Despite some

anxiety over whether lawmakers will raise the statutory U.S. debt ceiling in the

next two months and head off a government default, Powell said not doing so

would be "unprecedented" and a "major shock to the economy."  

     Whether that would impact the Fed's plans to begin phasing out

reinvestments of its assets is "to be decided," he said.

--MNI Washington Bureau; +1 202-371-2121; email: jean.yung@marketnews.com

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