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Fed Chair Jerome Powell likes the economy hot
[WASHINGTON] Federal Reserve Chairman Jerome Powell probably will kick off his post-meeting press conference on Wednesday the same way he's begun every one this year. The Fed, he'll tell reporters, has "one over-arching goal: to sustain the economic expansion.''
Behind that anodyne mission statement lies a grand ambition. Mr Powell is effectively taking on a task that many of his inflation-wary predecessors shunned: extend the fruits of a growing economy to those who rarely benefit, from struggling African-American families to poor rural white people.
The improvement in the jobs market has "started to reach communities at the edge of the workforce," Mr Powell told lawmakers this month. "It's just so important for us to continue that process for a couple of years.''
That means keeping the economy growing at or ideally somewhat above its long-run cruising speed of about 2 per cent, and running a high-pressure labor market by holding unemployment down at levels many economists think unsustainable.
To help in that effort and to protect the US from downside risks from abroad, the Fed chief and his Federal Open Market Committee colleagues are expected to cut interest rates by a quarter percentage point after meeting Tuesday and Wednesday, lowering borrowing costs for the first time in more than a decade.
"I can't remember a Fed chair who was as emphatic about the benefits of this high-pressure labour market to people who have long been left behind,'' said Jared Bernstein, a one-time adviser to former Vice President Joe Biden who's now at the Centre on Budget and Policy Priorities.
Powell can afford to stoke the record-long expansion because inflation is contained and shows no sign of taking off, even with unemployment near a half-century low. Indeed, the Fed would welcome some rise in price pressures after years in which inflation has languished below its 2 per cent target.