Federal Reserve Chairman Jerome Powell stressed on Thursday that the central bank still believes it has room to stay on a path of gradual rate hikes that will allow wage growth to accelerate.
Powell, who rattled markets earlier this week with comments that seemed to indicate faster rate hikes ahead, told the Senate Banking Committee that the central bank has not seen decisive evidence of a strong move up in wage growth or a worrisome rise in inflation. For that reason, he said, the Fed does not feel it needs to speed up the pace of benchmark policy rate increases.
Federal Reserve Chairman Jerome Powell testifies as he gives the semiannual monetary policy report to the Senate Banking Committee, Thursday, March 1, 2018, on Capitol Hill in Washington. (AP Photo/Jacquelyn Martin)That answer stood in contrast to remarks Tuesday before the House Financial Services Committee when Powell appeared to be signaling that the Fed could be on the verge of boosting its projections to show four rate hikes this year instead of three because of widespread signs that economic growth was strengthening.
Those comments sent the Dow Jones industrial average down by 299 points as investors grew more concerned about rising interest rates. The market fell again on Thursday after Powell’s clarifying comments, though that downturn was attributed to fears of a potential trade war following remarks by President Donald Trump that the administration was preparing to levy punitive tariffs on imports of steel and aluminum.
Powell was making his public debut as Fed chairman after succeeding Janet Yellen on Feb. 5, with appearances before the House on Tuesday and the Senate on Thursday to deliver the central bank’s semi-annual monetary policy report.