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WASHINGTON – The chairman of the Federal Reserve, Jerome H. Powell, told a Senate panel on Tuesday that the economy is humming and the financial system is safe, but it does not matter that the United States.
In the first of two days of semiannual testimony on Capitol Hill, Mr. Powell asked questions about why inflation-adjusted wages continue to grow slowly despite a tight labor market. Mr. Powell acknowledged the disparity between low unemployment and low wage earnings, no quick fix, telling the Banking Committee that it is easy to wage growth.
Pressed repeatedly by Democrats about what the Fed could do to accelerate wage growth, Mr. Powell said. He has a range of factors outside of the labor market, including a slowdown in advancements in educational attainment in the American work force.
tax law has been stimulated by the American economy, agreeing with a Republican senator's badessment that the tax advance has increased to a greater extent. I think it would be early to look for a lot of things, "Mr. Powell said.
Some measures, to run the Fed's 2 percent target – Mr. Powell faced almost no questioning or criticism about price increases, and no pushback on the central bank's plans to continue raising interest rates. It has been proposed that the Fed be rethinking the plans to return to historically normal levels, keeping the Monetary Policy Report that fed officials sent to Congress last week.
. Mr. Powell has been advised about the tariffs that President Trump has pointed out to China, the European Union and other trading partners, but said that "countries that have gone into a protectionist have done worse" historically than countries that have opened themselves to trade
Mr. Powell said it was possible Mr. Trump's strategy would be up liberalizing, by forcing other nations to reduce tariffs on American exports. He also said it was possible, and that growth could be dampened by an escalating trade war.
"We do not see it in the numbers yet," Mr. Powell said, "but we've seen a rising chorus of concern. "
Several Democrats criticized Mr. Powell's approach to financial regulation, including questioning why the Fed is loosening the Volcker Rule to allow broad banks to engage in more risky trading at a time of soaring profits for the financial industry . As he often does, Mr. Powell said he would like to tailor regulations to reduce their burdens on business while maintaining effectiveness. "Financial stability, I do not worry about that too much," he said.
The only sustained moments of conflict in the hearing when Mr. Powell was questioned by Senator Elizabeth Warren, Democrat of Mbadachusetts and a prominent critic of Wall Street, who pressed the chairman on the results of the Fed's recent stress tests for large banks.
Morgan Stanley, Goldman Sachs and State Street Fed exams found weakness in their capital levels during a severe economic downturn. They were forced to pay their dues at last year's levels, but did not fail the tests.
"The Fed looked the other way," she said. "The Fed let these banks off with a conditional non-objection. It looks like, to me, the Fed is heading in the wrong direction here. "
Mr. Powell said the Fed had not changed policy in the past. Earlier in the hearing, he told the committee that this year's round of tests was "by a margin, the most stringent stress test we've done yet."
On policy issues, Mr. Powell urged the federal government to move away from its outsize role in
"It's really important that we get the housing finance system off the government's balance sheet," he said. The comments cause a dip in Fannie and Freddie's stock prices.
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