“Rates should be set at a neutral level, he stressed. — Subject to certain risk factors, observed at the present time, we have to be patient and follow as the situation develops”.
Last year fed 4 times raised the stakes, and the last time was in December. Since then, Powell says, it became apparent that automatically continue, such actions should not, despite the stable position of the American economy. It is, as he stressed, successfully developed, but not too quickly, that is the likelihood of overheating is practically absent.
What’s more, perhaps even slowing associated, primarily, with events of global scale — lower growth in China and the Old world, ongoing political uncertainty due to protracted negotiations on the terms of mutual trade, waged by Washington and Beijing, as well as the consequences of a British exit from the European Union.
“In recent months we have received several conflicting signals, — said Powell. And currently the greatest threat to us are the problems faced by other economies. And instability in the financial markets, including sharp fluctuations in stock prices, do not contribute to the further development”.
For now there are only program modification of the portfolio of the Federal reserve, amounting to 4 trillion USD, but it could soon be completed. First of all we are talking about getting rid of the assets that were acquired during the recession — mostly securities issued secured by mortgage loans and real estate.
The fed does not hide the fact that the extremely low unemployment rate can cause a sharp increase in wages, and subsequently, with the increase in the hands of money and inflation. For the past several months it is less than 2% per year, i.e. does not require intervention in the form of bid adjustments.
Finally, Powell warned that one of the most urgent problems requiring solutions, is not rising prices. The Federal government, he concluded, it is not necessary to take more and more money, especially considering the fact that in the next few years, the budget deficit and so would be less than $ 1 trillion. And new loans can make the situation even more unstable and unpredictable.