Fed's Powell again stresses patience as U.S. economy's 'narrative' unfolds

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After four rate hikes previous year, the Fed would be "bordering on going too far and possibly tipping the economy into recession" if rates go higher, Bullard said, adding that he would be willing to cut interest rates if needed. "The principal worry is global growth", he said.

Powell pointed out that the US may be more vulnerable to a slowdown in global growth because of the rise on globalized business and supply chains.

He also anxious about the lack of key economic statistics during the government shutdown that the Fed uses to take the temperature of the economy. He brushed off the idea that tariffs were having a bit impact on either the US economy or China's, saying trade disputes had not left a "visible mark" on the economies of either country.

James Bullard, president of the St Louis Federal Reserve Bank, one of 12 in the Fed system and a voting member of the policy committee this year, called the current interest rate "a good level", in an interview with the Wall Street Journal.

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The speech reinforces comments by other policy makers this month that the Fed is likely to keep interest rates on hold through at least March following four hikes in 2018.

Speaking at the Economic Club of Washington, Powell reiterated that the U.S. central bank has the ability to be patient on monetary policy given stable price measures.

"I would expect them to repeat that the economy is strong", Scotiabank economist Derek Holt said.

"Financial markets are expressing a view of concern about downside risks associated with global growth and with trade", Powell said.

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"We are very focused on our job", Powell said. He said the Fed's aim was to return the balance sheet to a "more normal level" but didn't specify what that level will be. Echoing remarks by Chairman Jerome Powell earlier in the day, Clarida said the Fed can afford to be patient in determining its monetary stance.

Powell also said he didn't think it would be appropriate to reject an invitation to meet with Trump, but he hasn't yet received such an invitation.

He also said that the Fed had no preset path for rate hikes and would be "patient" when determining whether to hike interest rates further in response to strong USA growth that risks sparking inflation, or to pause rate hikes to account for a global economic slowdown.

Fed officials and many forecasters expect growth to slow in 2019, but to remain strong enough to continue generating jobs and keeping the unemployment rate near its nearly 50-year low.

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