MNI REVIEW: Powell Says Fed In Good Place, Not On Sidelines

By Evan Ryser

     WASHINGTON (MNI) - The Federal Reserve is unlikely to adjust interest rates

anytime soon as long as the economy remains on its moderate path, but the

central bank will remain attentive to data, Federal Reserve Chair Jay Powell

said before the Joint Economic Committee of Congress Wednesday. 

     When asked whether he saw the Fed maintaining the current interest rate

through 2020, Chair Powell said "I wouldn't say that at all," before saying that

the current stance of policy will likely remain appropriate as long as incoming

information remains broadly consistent with the outlook of moderate growth. 

     "That's a very data dependent statement," said Powell, who will testify

again tomorrow to the House Budget Committee at 10:00 am ET. 

     "We do think monetary policy is in a good place."

     --NEGATIVE RATES

     "Negative interest rates would certainly not be appropriate in the current

environment," Powell said. "Our economy is in a strong position." 

     "The very, very low rates - and even negative rates - that we see around

the world would not be appropriate for our economy. You tend to see negative

rates in the larger economies at times when growth is quite low and inflation is

quite low. That is just not the case here," Powell said. 

     --LABOR MARKETS 

     Powell said the the current level of unemployment is consistent with a

healthy labor market but is not "presenting any difficulties" and is not enough

to produce upward price pressure.

     The Fed needs to have "significant humility" when it makes estimates about

the natural rate of unemployment: "We don't know where maximum employment

precisely is." 

     "We need to let the data speak to us. The data are not sending any signal

that the labor market is so hot or that inflation is moving up or anything like

that."

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

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