Economist's Insights

Fed Chair Nominee Jay Powell’s Confirmation Hearing No Fireworks Show

Nov 28, 2017

The tone of Fed Governor Jay Powell’s remarks during his confirmation hearing before the Senate Banking Committee were consistent with the content of his opening remarks released on Monday. Powell said he sees no signs of the economy overheating and expects growth of 2.5% for the full year of 2017 and something close to that in 2018. However, with labor force growth slowing he commented that it’s important for policymakers to focus on boosting the longer-run growth rate. On current status of the Fed’s progress in achieving its mandate, he said certain indicators are signaling that the economy is at or near full employment but wage growth could be indicating that there is potentially additional slack to be absorbed. Powell stressed that achieving the 2%-inflation goal is important for the Fed’s credibility and that if the Fed determines the trends rate for inflation is lower, it could adjust and hike more slowly. However, he said the Fed has been patient with removing accommodation but it should continue gradually normalizing rates, adding that the case for a December hike is coming together.