Federal Reserve Chairman Jerome Powell on Tuesday said the economy has been sending “conflicting signals” that justify a “patient approach” on future changes to interest rates.
“While we view current economic conditions as healthy and the economic outlook as favorable, over the past few months we have seen some crosscurrents and conflicting signals,” Powell said in testimony prepared for delivery to the Senate Banking Committee.
The Fed chairman pointed out that growth has slowed in some major foreign economies, particularly China and Europe.
“The baseline outlook is a good one, a favorable one,” Powell told the chairman of the Senate Banking Committee, Mike Crapo. “When growth is booming around the world, we feel that as a tailwind, when growth is slowing, we feel it as a headwind. We are feeling some of that now, and we may feel more of it.”
Brexit and ongoing trade talks were added, he said.
Lawmakers were not aggressive in teasing out the Fed’s interest-rate strategy, so much so that Powell himself volunteered a clarification of his prepared testimony at the very end of the hearing.
“When I say we’re going to be patient, what that really means is we’re in no rush to make a judgement about changes in policy,” he said. “I think we’re in a very good place to do that.”
Analysts said Powell didn’t add much new information to their assessment of Fed direction.
“Chair Powell’s first day of testimony delivered relatively little marginal information and served to reinforce the idea that Fed policy is on ‘pause’ while FOMC participants are ‘patiently’ ‘waiting and watching,’” said Andrew Hollenhort of Citi.
U.S. stocks SPX, -0.01% sported minor gains in late afternoon trade.
Related stories: Powell’s answers on deficit spending, climate change set up more contentious House hearing
Also read: Powell isn’t wrong — U.S. health spending is almost off the charts