The US economy is showing no signs of overheating, so the job market can continue to tighten without generating troubling inflation, US central bank chief Jerome Powell said Thursday. After his comments highlighting the strengthening economy roiled financial markets on Tuesday amid concerns the Federal Reserve would raise interest rates at a faster pace, Powell made it clear that gradual rate hikes would allow the economy to continue to expand.
With its incremental moves in the benchmark lending rate, the Fed is trying to strike a balance between achieving full employment and not allowing the economy to overheat, Powell said in the second day of his semi-annual testimony to Congress. But, he told the Senate Banking Committee, "There's no evidence that the economy's currently overheating."
He repeated that the gradual path of rate increases that the Fed has been pursuing - with three rate hikes last year - "will continue to be the appropriate path as long as the economy performs this way." In his testimony earlier this week, Powell presented a very bullish view, saying the economic outlook had strengthened since December, citing the growth boost from the recently enacted tax cuts as well as a stronger global economy.
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