Fed's Powell sees solid but slower U.S. economic growth in 2019
  • ECONOMY

  • 21:06 26 February 2019

Fed's Powell sees solid but slower U.S. economic growth in 2019

The U.S. economy will grow at a solid though slower pace in 2019 and the Federal Reserve will remain “patient” in deciding whether to further raise interest rates, Fed Chairman Jerome Powell said on Tuesday, ONA reports citing Reuters.

Powell reaffirmed the policy shift made by the U.S. central bank last month, telling a Senate Banking Committee hearing that “crosscurrents and conflicting signals” had weakened the case for further rate increases and made an otherwise positive economic outlook less certain.

“We view current economic conditions as healthy and the economic outlook as favorable,” Powell told lawmakers, projecting that the economy would expand at a solid pace in 2019, albeit somewhat slower than in 2018, and the job market would remain strong.

U.S. Treasury yields ticked up modestly. The 2-year benchmark rose to 2.49 percent, from 2.48 percent, after the release of Powell’s prepared remarks to the committee. The S&P 500 index pared earlier losses and was trading flat around midday.

The Fed now estimates that gross domestic product grew by slightly less than 3 percent in 2018. The U.S. government is scheduled on Thursday to release its fourth-quarter GDP report, which was delayed by the recent partial U.S. government shutdown.

“Some data have softened but still point to spending gains this quarter,” Powell said, highlighting the sometimes contradictory set of information the Fed grappled with at year’s end.

That included a global market sell-off, fears of a widening U.S.-China trade war, slow growth among major U.S. trading partners and worries that the Fed itself would raise rates more aggressively than conditions warranted.

Recent retail sales data were disappointing and some Fed officials have worried that inflation could slip, though Powell said the central bank still feels the pace of price increases will remain close to its 2 percent target after accounting for the temporary influence of lower oil prices.

The recent 35-day government shutdown added to those U.S. growth concerns, though Powell said it is expected to have had a fairly modest impact on the overall economy that will largely unwind in the coming weeks as workers, for example, receive back pay for missed time.

Faig Mahmudov

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