WASHINGTON (Reuters)—U.S. Federal Reserve Chair Jerome Powell on Nov. 13 testified before Congress and indicated that the Fed doesn’t plan to cut rates anytime soon.
The Fed chairman also talked about the negative rates of interest that countries including Switzerland and Germany currently pay on their government bonds. He said negative interest rates aren’t appropriate for a U.S. economy with ongoing growth, a strong labor market, and steady inflation.
President Trump has called for the Fed to cut rates and deliver the same for the United States A day before the hearing, the president said the “Federal Reserve doesn’t let us do it” in New York.
“Negative interest rates would certainly not be appropriate in the current environment,” Powell said in response to a question about why European countries can in effect tax their bondholders by paying back less than is borrowed.
“Our economy is in a strong position. We have growth, we have a strong consumer sector, we have inflation a bit below target … You tend to see negative rates in the larger economies at times when growth is quite low and inflation is quite low. That’s just not the case here,” he said.
He said the impact of three rate cuts this year are still to be fully felt in supporting household and business spending, and will let the central bank likely stop where it is unless there is a “material” deterioration of the economy.
“We see the current stance of monetary policy as likely to remain appropriate as long as incoming information about the economy remains broadly consistent with our outlook of moderate economic growth, a strong labor market, and inflation near our symmetric 2% objective,” Powell said. The baseline outlook for the economy “remains favorable.”