Federal Governor Jerome Powell, who is scheduled to appear before a Senate panel, has attracted the attention of traders due to his comments on inflation and regulation.
In a written testimony, prior to his appearance before the Senate Banking Committee, Powell said that if he were confirmed as the next Federal Reserve chairman, he expected it to keep increasing interest rates in order to achieve his two main goals – maximum employment and stable prices. However, he said this needs to be done cautiously.
He added that the Fed would also try to ease regulatory burdens on banks, while at the same time keeping in place reforms passed by Congress in order to stop another financial crisis from happening. Powell sought to present himself as a figure of stability while keeping open to changes if needed.
“We will continue to consider appropriate ways to ease regulatory burdens while preserving core reforms … so that banks can provide the credit to families and businesses necessary to sustain a prosperous economy,” he said, regarding banking regulations.
On interest rates, Powell said he expected that by raising interest rates “the size of our balance sheet will gradually shrink.”
Under Janet Yellen, interest rates were increased four times, with another one expected in December and another three next year. Powell pointed out that despite efforts to make interest rate policy as foreseeable as possible, the future can’t be known for sure, so he emphasized the importance of flexibility in adjusting and responding to economic development.
Yellen, who was not offered a second term by President Donald Trump, announced that she will step down from the Fed board after Powell succeeds her in February.
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