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Fed Chair Powell Paints Rosy Picture Of US Economy

Fed Chair Powell Paints Rosy Picture Of US Economy

Federal Reserve Chairman Jerome Powell on Tuesday delivered his semiannual testimony to the Senate Committee on Banking, Housing and Urban Affairs, and he had positive things to say about the health of the U.S. economy. Powell said he doesn’t see any reason why the Fed should stop raising interest rates anytime soon.

“Overall, we see the risk of the economy unexpectedly weakening as roughly balanced with the possibility of the economy growing faster than we currently anticipate,” he said.

Powell credited the aggressive fiscal policy of the current administration with boosting U.S. economic growth.

Easy Jobs

Powell said it’s extremely easy for Americans to find jobs these days considering the historically low unemployment rate.

“Robust job gains, rising after-tax incomes, and optimism among households have lifted consumer spending in recent months,” Powell said.

The U.S. economy grew by 2 percent in Q1, and Powell said growth was “considerably stronger” in the second quarter. The Federal Reserve has already raised interest rates twice in 2018 and is expected to issue two more rate hikes by the end of the year.

Healthy Inflation

Powell said investment in U.S. businesses has been increasing at a healthy rate. Inflation of 2 percent is currently right in the ideal range, and even with near-full employment, he said wage growth has not yet reached the point of concern.

Powell also briefly touched on the international trade war, saying it's “difficult to predict” the impact it will have on the economy.

Investors seemed to like Powell’s message, with the markets trading up marginally Tuesday afternoon.

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