Fed Chairman Powell says he is 'very worried' about growing amount of U.S. debt




Federal Reserve Chairman Jerome Powell is "very worried" about the ballooning amount of United States debt.

The Fed raised its benchmark overnight lending rate four times in 2018 as a part of its goals of maximizing employment and keeping prices in check. Powell and his colleagues have cited months of strong labor statistics and healthy GDP numbers while hiking rates.

However, tepid inflation and concerns surrounding the longevity of the current economic expansion have prompted backlash from some market participants. Fears that policymakers may be elevating borrowing costs at too quick a pace contributed to a broad stock sell-off in the fourth quarter of 2018, with both the Dow Jones Industrial Average and the S&P 500 posting their worst Decembers since the Great Depression.

Recent commentary from central bank members suggests that Fed members may be heeding those concerns. Minutes from the central bank's December meeting showed some members hesitant to hike the federal funds rate , citing the lack of inflationary pressure.

Officials agreed that "some further gradual increases" in the benchmark funds rate would be appropriate, though the low-inflationary backdrop means the Fed can "afford to be patient about further policy firming."

Powell has also underscored the Fed's dependence on economic data when making future decisions on whether to hike interest rates or adjust the rate at which it reduces its balance sheet.

- This is breaking news. Please check back for updates.

COMMENTS

More Related News

Why the Federal Reserve Is Expected to Buy Trillions More in US Debt
Why the Federal Reserve Is Expected to Buy Trillions More in US Debt

The Federal Reserve Bank is selling off about $1 trillion worth of mortgage-backed securities it acquired in the wake of the financial crisis as it brings its qualitative easing program to a close, but that doesn't mean we'll see much of a reduction in the Fed's overall balance sheet. According to a new report from Wells Fargo, the Fed is expected to replace much of the mortgage-backed securities with U.S. Treasuries. The analysts said the Fed could purchase as much as $2 trillion worth of Treasury debt over the next decade.Why would the Fed do this, rather than permanently shrinking its balance sheet? Bloomberg's Liz McCormick and Alex Harris provide an explanation:"Part of it simply has...

US business debt a
US business debt a 'moderate' economic risk: US Fed's Powell
  • World
  • 2019-05-20 23:57:40Z

The American private sector's mounting debts pose a "moderate" risk to the world's largest economy, Federal Reserve Chairman Jerome Powell said Monday. "As of now, business debt does not present the kind of elevated risks to the stability of the financial system that would lead to broad harm to households and businesses should conditions deteriorate," Powell said.

Asian Stocks Set for Mixed Open; Aussie Jumps: Markets Wrap
Asian Stocks Set for Mixed Open; Aussie Jumps: Markets Wrap

Markets remain fragile after the escalation in the trade war with China calling on the U.S. to negotiate on equal footing and Foreign Minister Wang Yi telling Secretary of State Mike Pompeo in a call that while it's still possible to work out a deal, Beijing must safeguard its interests. A slew of U.S. data this week from home sales to manufacturing may offer some clues on the robustness of the economic expansion and Wednesday brings minutes from the Federal Reserve's latest policy meeting. Elsewhere, Bank of America predicted Indian stocks, currency and bonds will likely rise when markets open after exit polls showed Narendra Modi is poised to retain power.

Leave a Comment

Your email address will not be published. Required fields are marked with *

Cancel reply

Comments

Top News: Economy

facebook
Hit "Like"
Don't miss any important news
Thanks, you don't need to show me this anymore.