None of Powell’s comments indicated the central bank would stray from expectations that at its December meeting it will hike rates for a fourth time this year. The Fed left rates unchanged at its meeting last week.
Powell said the Fed is raising rates slowly in an attempt to avoid the mistake of hiking them either so quickly that it pushes the economy into a recession, or moving too slowly and allowing inflation to get out of control.
This gradual approach has translated into a total of eight quarter-point rate hikes since the Fed began raising rates in late 2015. Those came after seven years in which the Fed kept its key policy rate unchanged near zero in an effort to lift the country out of the deepest recession since the 1930s.
During the recent turbulence in stock markets, Trump grew increasingly pointed in his criticism of the Fed’s moves, saying they risked undoing his efforts to boost the economywith tax cuts and were not needed because inflation remains low.
“We have an important job that Congress has assigned. We have the tools to do it and we have the protections to do it,” Powell said.
He also stressed that in his view “our economy is in such a good place right now,” citing low unemployment and strong growth.
Asked what headwinds he saw, Powell said that the current global slowdown is a concern. He also noted expectations that the strong support the U.S. economy has received from the $1.5 trillion tax cut Trump pushed through Congress last December and a big boost in government spending will fade.
That could be happening in the next year or so, he said.
At another point, he was asked about the old Wall Street adage that bull markets don’t die of old age but rather get killed by the Federal Reserve.