Powell Backs Gradual Tightening; Not Behind the Curve

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Gradual monetary policy tightening should be appropriate if the economy continues as it's going, Federal Reserve Board Governor Jerome H. Powell said Wednesday, noting the Fed is not behind the curve.

"Going forward, I see it as appropriate to gradually tighten policy as long as the economy continues to behave roughly as expected," Powell told the Forecasters Club of New York, according to prepared text released by the Fed. "As always, the actual path could be faster or slower than expected and will depend on developments in the economy."

The labor market should continue strengthening and inflation should move near 2%. While this would push unemployment below the natural rate "for some time," Powell called it "a desirable outcome."

"[I] do not see data suggesting that we are behind the curve," he said. "In recent years, the economy has faced significant downside risks, particularly from weak global conditions. The Committee has been quite patient, and I believe that has served us well. But risks now seems to me to be more in balance."

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