Federal Reserve Board Governor Jerome Powell, who as recently as the end of September was promoting patience on rate hikes, appears to be on board with an increase in the fed funds rate target at the December Federal Open Market Committee meeting.
Calling economic growth "healthy," Powell said, "In my view, the case for an increase in the federal funds rate has clearly strengthened since our previous meeting earlier this month. Of course, the path of rates will depend on the path of the economy."
He noted job gains remain "solid" and inflation is creeping toward the Fed's 2% target.
"With inflation below target, relatively slow growth, and some slack remaining in the economy, the Committee has been patient about raising rates. That patience has paid dividends," Powell told the Economic Club of Indiana, Tuesday, according to prepared text released by the Fed. "But moving too slowly could eventually mean that the Committee would have to tighten policy abruptly to avoid overshooting our goals."
Although recovery from the Great Recession has been slow, he said, "[t]oday, we are reasonably close to achieving full employment and our 2 percent inflation objective."
Going forward, Powell said, he sees challenges that include an aging population, which likely will result in slower growth. "If living standards are to continue to rise, we need policies that will support productivity and allow our dynamic economy to generate widespread gains in prosperity."
