WASHINGTON – Federal Reserve Chairman Jerome Powell said Tuesday that U.S. job growth since early last year was not as robust as thought, a hint that the Fed may be ready to keep cutting interest rates to support the economy.
Powell also said the Fed will soon announce plans to buy Treasurys, likely short-term bills, to try to pump more cash into overnight money markets. The goal is to keep short-term rates at their target level and isn't needed to support the economy, the Fed chairman added.
Downward revisions to the government's hiring data, announced in August, suggest less upward pressure on wages and inflation.
“Where we had seen a booming job market, we now see more-moderate growth,” Powell said in a speech at an economic conference in Denver.
The Fed raised its benchmark short-term rate four times last year, ending at a range of 2.25% to 2.5%.
The reasoning behind these rate hikes was based in part on the notion that brisk hiring would enable workers to secure higher pay, which would ultimately lead to higher inflation. Yet so far, the pace of income gains and price increases has been modest.
Since the start of this year, the Fed has reversed two of those hikes, and investors expect a third rate cut late this month, according to market gauges .
Michael Feroli, an economist at JPMorgan Chase, said Powell's remarks Tuesday were “consistent with a further easing” of interest rates at the Fed's Oct. 28-29 meeting.
IMF warns of 'global slowdown' of economy
WASHINGTON – The new head of the 189-nation International Monetary Fund warned Tuesday that the world economy is in the grips of a “synchronized global slowdown” that will result in slower growth for 90% of the world this year.
IMF Managing Director Kristalina Georgieva said that an updated IMF forecast to be released next week will show growth falling to its lowest point since the beginning of this decade.
She blamed much of the slowdown on rising trade conflicts which she said could mean a loss of around $700 billion in output by the end of next year – 0.8% of world GDP.
“Everyone loses in a trade war,” she said.