Testimony in front of the Joint Economic Committee
- Fed does not have room it had in the past cut rates
- Lower rates, lower inflation, lower growth new normal
- Fiscal policy key part of countercyclical reaction
- Think we have the repo market strain under control
- Climate change important issue but not critical for Fed
Pres Trump often speaks about the experts talking about the "new normal" which he says his policies proved wrong in his administration. Powell may be feeding the Pres. with more ammunition for his criticism. Pres. Trump feels that the Fed can stimulate more growth by lowering rates even more.
- Outlook is good, households focused on a good job market
- US faces longer-term issues, including the labor force participation and productivity
- Exchange rates are one financial condition among many. Exchange rates are model input and not the way the Fed thinks about policy.
- Does not see wages moving up in an inflationary manner
- Immigration is a key input into longer term growth rate of the United States
- Risks of lower inflation greater than the risks of higher inflation
- Fact that the US interest rates are lower does not mean the US government can ignore deficits
- Debt is growing faster than the growth rate in the US economy nominally. That is unsustainable.
- There is a need to reduce US deficit
- It's is not the Fed's job to comment on trade policy, but it impacts the economy
- Tariffs and trade policy have been weighing on business sentiment and is part of the global slowdown in manufacturing, business investment, and export and trade
- We want incomes rising broadly across the spectrum
