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For the first time, Powell says more hikes are right path 'for now'





Reuters

Federal Reserve Board Chairman Jerome Powell said the risks are "roughly balanced."

Saying that monetary policy should be a mystery to no one, "Federal Reserve Chairman Jerome Powell: "With a strong job market, inflation close to our objective, and the risks."

The federal funds rate, "Powell told the Senate Banking Committee.

Related: Powell Testifies Congress ̵

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Krishna Guha, Fed Watcher at Evercore ISI said the phrase "we can not be very far in time and in space from the space

Powell remarks were upbeat.

Powell remarks were upbeat. He said the economy was growing at a "solid pace," and the unemployment rate was expected to fall further. Even the recent pickup in inflation, towards the Fed's 2% target, is what "encouraging," he said. Powell pointed to "good news" in the decline in the unemployment rates for African Americans and Hispanics. While the gains are moderate, "he said."

Related: African-American unemployment rate low from record low

At the same time, Powell was considered a key area of ​​uncertainty in the outlook.

"It is difficult Powell said: Powell said.

Powell on the impact of trade tariffs on the economic outlook.

Overall, the Fed has the risks of being out-of-date, as a result of the economic crisis

The Fed has already hiked interest rates twice a year to 1.75% -2% and has penciled in two more quarter- point moves.

Read: At the same time, the Fed has taken a policy to reduce its holdings of treasury and mortgage-backed securities. Powell said.

A key challenge for the Fed wants to keep inflation close to the 2% level, he added.

"We want to continue to keep a close eye on inflation." 2%, "Powell said.

The Fed said the healthy economy would be over 2%, could last for several years.

Several factors are contributing to this positive outlook, the banking system is more than the crisis and fiscal policy is stimulative, Powell said. In addition, the outlook for the global economy "remains solid despite greater uncertainties in several parts of the world," he added.

The yield on 10-year Treasury notes

                            
                            
                                  
      
      
      
      
      
      
      
                                  
                                     TMUBMUSD10Y, + 0.03%

was little changed after Powell's testimony while stocks

                            
                            
                                  
      
      
      
      
      
      
      
                                  
                                     DJIA, + 0.25%

moved higher.

Asked about the flatness of the yield curve, Powell said they have little appetite for significantly inverting the yield curve, "said Andrew Hollenhorst, an economist at Citigroup.

The long-term view yield differential between 2-year and 10-year notes is near the narrowest level since 2007. An inverted yield curve is seen by many observers and Fed officials as an accurate predictor of recessions.


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