MNI POLICY: Fed's Powell: Monetary Policy Is Well Positioned

By Evan Ryser

     WASHINGTON (MNI) - The Federal Reserve is set to pause with the economy on

a sound footing and inflation expected to move back to target, Chair Jerome

Powell said Monday.

     "Monetary policy is now well positioned to support a strong labor market

and return inflation decisively to our symmetric 2 percent objective," Powell

said in prepared remarks at the Greater Providence Chamber of Commerce. 

     In his last scheduled remarks before the Fed enters its blackout period,

Powell reiterated confidence in the economy and the insurance that the Fed has

taken out to prolong the 11-year expansion against global trade risks. 

     "At this point in the long expansion, I see the glass as much more than

half full," he said. "If developments emerge that cause a material reassessment

of our outlook, we would respond accordingly. Policy is not on a preset course."

     Powell indicated the Fed may hold the federal funds rate between 1.50% and

1.75% for some time, pointing to a need to wait for inflation to reach the 2%

symmetric objective and allowing the benefits a strong economy to spread to

those at the bottom wage levels.

     Running persistently below the inflation target can lead to an unhealthy

dynamic, Powell said, in which inflation expectations drift down, pulling actual

inflation further down. 

     "We are strongly committed to symmetrically and sustainably achieving our 2

percent inflation objective," Powell said. 

     Powell also applauded employment benefits, noting upticks in prime age

participation and wages rising for low- and middle-income workers.

     "There is still plenty of room for building on these gains. The Fed can

play a role in this effort by steadfastly pursuing our goals of maximum

employment and price stability," Powell said.

     "Fortunately, the outlook for further progress is good" Powell said. 

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

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