Fed chief Jerome Powell sees moderate US growth, says recession unlikely

Jerome Powell speaking a panel discussion hosted in Zurich.
Jerome Powell speaking a panel discussion hosted in Zurich.PHOTO: REUTERS
VIDEO: REUTERS

WASHINGTON (DPA) - US Federal Reserve chief Jerome Powell said on Friday (Sept 6) he does not expect the US or global economy to enter a recession, despite risks to the econonomic outlook, in part stemming from uncertainty over trade policy.

"I don't see recession as the main likely outcome," Powell said in a speech in Zurich.

Instead, Powell said he expects the US economy to see moderate growth.

His speech marked his last public event before a closely watched Fed meeting later this month. There are rising market expectations that the central bank will cut rates.

The interest rate tightening cycle was put on hold at the end of last year, and in July cuts its benchmark rate by a quarter point for the first time since 2008.

Powell said the Fed would "act as appropriate to sustain this expansion" and stressed that the central bank was committed to its 2 per cent inflation target. He believed the labour market and US consumers were in good shape.

While the central bank chief insisted that his institution would stay out of trade policy, he noted that officials were "hearing quite a bit about uncertainty" from businesses, which was weighing on investment sentiment.

 

"I think it is the case that uncertainty around trade policy is causing some companies to hold back now on investment," he said.

Employment data released Friday showed the US jobless rate holding steady at 3.7 per cent but a weaker pace of job creation, with wages also rising more slowly.

US President Donald Trump has been pushing for lower interest rates to stimulate the economy. Powell has indicated the Fed will not make decisions based on political pressures.

In a tweet on Friday morning, the president insisted "the Fed should lower rates" and once again lashed out at Powell. "Where did I find this guy Jerome? Oh well, you can't win them all!"

Powell has said he aims to complete his four-year term at the helm of the central bank and would not step aside even if the president tried to fire him, noting that the Fed was an independent institution with a mandate from Congress.