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"Interest rates remain low by historical standards and remain slightly below the broad range of level estimates that would be neutral for the economy, ie, They have not accelerated or slowed growth, "said Fede President Jerome Powell. He added that the threats to the stability of the financial system "are at a moderate level".
Analysts pointed out that there was a significant change in the tone of the Fed chairman. On October 3, Powell said that interest rates "they are far from the neutral level ".
– We also know that the economic effects of our gradual rate increases are uncertain. It can take up to a year or more before we fully realize the effects of rising interest rates. While the projections of the FOMC participants are based on our best prospects, The Fed has no way ready for monetary policy – said the head of the Fed.
Jerome Powell said that in the near future "we can expect solid growth in GDP, a low unemployment rate and inflation close to 2%". He noted that this view is shared by the FOMC and many private sector economists.
Fear of the Fed's action
The president of the Federal Reserve added that there is a risk that actions Fed they may be too slow or too fast. Gradually, interest rate increases, in his opinion, help to avoid both scenarios.
According to Mr. Powell, a too rapid rise in interest rates could contribute to "slowing GDP growth in the United States" and "prolonged maintenance of too low interest rates could lead to other distortions, such as rising inflation or destabilizing financial imbalances ".
In the opinion of the head of the Fed threats to the stability of the financial system "they are at a moderate level ".
Jerome Powell pointed out that some of the heavily indebted entities would certainly have problems if the economy was in trouble.
According to the banker, corporate debt raises concerns, but does not threaten the entire financial system. Possible failures of indebted companies "will not pose a threat to the security and reliability of the institutions of the financial system".
The Fed Chairman said that "asset market valuations are broadly in line with historical benchmarks, such as the price / earnings ratio."
Powell added that the Fed was preparing "for a wide range of possible solutions" to the issue of brexit.
Rising interest rate
The latest rate hike in the United States occurred after the September 26, 2018 meeting. This was the eighth increase in the cycle launched in December 2015 and the third in 2018, with the funds going up.
The next meeting of the Federal Reserve is scheduled to December 18-19, 2018. President Jerome Powell's conference will also be held, as well as the publication of quarterly macro projections.
According to the Fed's current forecast, there will be four increases in 2018 and three more in 2019. Analysts believe that December's interest rate hike could be judged, but Wednesday's comments from Powell could lead to speculation as to whether the trajectory of the Fed in 2019 will be maintained.
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