The economic outlook looks strong, although financial conditions across the country have reversed the “easing” that occurred last year, the chairman of the board of the nation’s central bank said Tuesday.
He also said his agency wants to protect and strengthen financial regulatory reforms enacted in the wake of the 2007-08 financial crisis.
Testifying before House Financial Services Committee, Federal Reserve Board Chairman Jerome H. “Jay” Powell said that, after easing substantially during 2017, financial conditions across the country have reversed some. “At this point, we do not see these developments as weighing heavily on the outlook for economic activity, the labor market, and inflation. Indeed, the economic outlook remains strong,” he told the committee.
Powell testified that the “robust job market” should continue to support growth in household incomes and consumer spending. He said “solid economic growth” among U.S. trading partners should lead to further gains in U.S. exports and that upbeat business sentiment and strong sales growth will likely continue to boost business investment.
“Moreover, fiscal policy is becoming more stimulative,” he said. “In this environment, we anticipate that inflation on a 12-month basis will move up this year and stabilize around the FOMC’s 2% objective over the medium term. Wages should increase at a faster pace as well. The (interest-rate setting Federal Open Market) Committee views the near-term risks to the economic outlook as roughly balanced but will continue to monitor inflation developments closely.”
In other remarks, during questions and answers with committee members, the Fed chairman said the goal of the central bank is to strengthen and protect financial regulatory reforms imposed after the financial crisis of a decade ago. He said those include bank capital and liquidity requirements.
“We want to make sure that we keep those strong and, by the way, transparent as they apply particularly to our largest institutions,” he said.
Testimony by Chairman Powell on Semiannual Monetary Policy Report to the Congress