Powell credits strong United States economy to Fed policies

Fed announces wide-ranging review of its practices

Powell credits strong US economy to Fed policies

The Federal Reserve, under pressure from a critical White House even while it largely hits its inflation and employment targets, will conduct an extensive review next year of how it guides the US economy as it seeks to become more open and accountable.

Sharing his views with audience at an event in Dallas, Texas on Wednesday, Powell said the global economy has gradually chipped away at the growth pace it enjoyed a year ago, saying, however, that he was "very happy" about the state of the USA economy. "We're just trying to do our jobs, and we're doing fine", he added, trying to avoid a public wrangle with the president.

President Donald Trump has publicly slammed the Fed's gradual interest rate hikes, saying higher borrowing costs threaten the economic expansion.

The central bank chief also told investors to remain vigilant against a set of potential risks that are expected to come next year or so, including a falling foreign demand, a chilling domestic real-estate market, as well as waning fiscal stimulus as the impact of tax cuts gradually waters down.

"We are absolutely committed to serving the public in a non-partisan, professional way, in a way that communicates what we're doing and why we're doing it as clearly as possible", Mr Powell said. It also began publishing individual policymakers' anonymous forecasts for future rate hikes and key economic metrics.

Powell said political criticism would not affect the Fed's policies.

Now that the economy is growing well above potential and unemployment is down to 3.7 percent, with inflation roughly at the 2-percent target, the Fed has settled into a roughly quarterly rate-hike cycle.

"We have an important job that Congress has assigned".

"Powell tried to come across as neutral, in our view, which may be perceived as dovish by the markets", said Sonia Meskin, an economist at Standard Chartered Bank.

"Our policy is part of the reason the economy is in such a good place now", the New York Times cited him as saying. He also noted expectations that the strong support the US economy has received from the $1.5 trillion tax cut Trump pushed through Congress last December and a big boost in government spending will fade.

Powell also said there was a broad consensus among Fed officials that the central bank should keep raising its benchmark interest rate in the near term.

That could be happening in the next year or so, he said.

At another point, he was asked about the old Wall Street adage that bull markets don't die of old age but rather get killed by the Federal Reserve.

"None of these alternative frameworks are without challenges but all are worth thorough review", Cleveland Fed President Loretta Mester said in an October 25 speech in NY.

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