The outlook for the US economy remains solid but new strains have emerged over the last year, Federal Reserve Chairman Jerome Powell said Tuesday.
delivered before the Senate Banking Committee, he said the central bank would be patient and monitor data before considering future policy adjustments.
While the labor market remains robust, expectations for growth have dimmed since Powell last gave congressional testimony in July. On Tuesday, he cited stock-market turbulence at the end of 2018 and ongoing political risks. In January, the Federal Open Market Committee held interest rates steady and signaled it could be nearing the end of the latest tightening cycle. Officials dropped a reference to"further gradual increases" after bringing its benchmark interest rate to a target range of between 2.25% and 2.5% the month before.
Powell reiterated plans for the Fed to hold a larger balance sheet than previously expected, saying $1 trillion"plus a buffer" would be a starting point for banking reserves. In 2017, the central bank began reducing the $4 trillion portfolio of US Treasury debt and other assets it acquired following the financial crisis. But it could end that process sooner than expected.
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