WASHINGTON – Federal Reserve Chairman Jerome Powell said Wednesday that the Fed is likely to keep its benchmark short-term interest rate unchanged in the coming months, unless the economy shows signs of worsening.
But for now, in testimony before a congressional panel, Powell expressed optimism about the U.S. economy and said he expects it will grow at a solid pace, though it still faces risks from slower growth overseas and trade tensions.
“Looking ahead, my colleagues and I see a sustained expansion of economic activity, a strong labor market, and inflation near our symmetric 2% objective as most likely,” Powell said before Congress' Joint Economic Committee.
Fed policymakers are unlikely to cut rates, Powell said, unless the economy slows enough to cause them to make a “material reassessment” of their outlook.
The Fed cut short-term rates last month for the third time this year, to a range of 1.5% to 1.75%.
“It now looks increasingly likely that the Fed will move to the sidelines for an extended period,” said Andrew Hunter, an economist at forecast firm Capital Economics.
Still, when asked if he expected rates to remain unchanged over the next year, Powell said, “I wouldn't say that at all.”
Powell's testimony comes a day after President Donald Trump took credit for an “economic boom” and attacked the Fed for not cutting interest rates further. Powell and other Fed officials, however, argue that their rate cuts, by lowering borrowing costs on mortgages and other loans, have spurred home sales and boosted the economy.
Most analysts forecast the Fed will hold rates steady when it meets next month.