Powell: Fed Rate Increases Balance Risks

Nov 29, 2018

The Federal Reserve’s pace of raising interest rates has focused on balancing the risks of shortening the economic expansion against accelerating inflation and financial distortions, Fed Chairman Jerome Powell said. Powell said there is no preset policy path, with Federal Open Market Committee members relying on economic data and understanding that the effects of rate increases may take a year or more to be realized.

Powell’s remarks coincided with the agency’s inaugural Financial Stability Report, which examined vulnerabilities in the U.S. financial system. The report cited elevated asset valuations and historically high corporate debt, though it said bank capital and funding risks are substantially improved from pre-crisis levels.