Federal Reserve Chairman Jerome Powell said the central bank can continue gradually raising interest rates as the outlook for growth remains strong, and the recent bout of financial volatility should not weigh on the US economy.
"Some of the headwinds the US economy faced in previous years have turned into tailwinds," Mr Powell said in written testimony to the House Financial Services Committee on Tuesday in Washington. "Fiscal policy has become more stimulative and foreign demand for US exports is on a firmer trajectory.''
Mr Powell takes over the rate-setting committee at a time when the world's largest economy may be shifting gear to faster growth, somewhat higher inflation and declining unemployment. Adding to the momentum are tax cuts and spending increases agreed to by Republican lawmakers and signed by President Donald Trump.
“In gauging the appropriate path for monetary policy over the next few years, the FOMC will continue to strike a balance between avoiding an overheated economy and bringing PCE price inflation to 2 per cent on a sustained basis,’’ he said, in his first public appearance before Congress as Fed chief.
The recent correction in the stock market and rising rates on US government debt shouldn’t hamper growth, he said.
"We do not see these developments as weighing heavily on the outlook for economic activity, the labour market and inflation," Mr Powell said. "Indeed, the economic outlook remains strong.''
Hel repeated the FOMC’s January message, saying “further gradual increases’’ in the Fed’s policy rate “will best promote’’ the attainment of the central bank’s objectives of maximum employment and stable prices.
"He is optimistic," said Ward McCarthy, chief financial economist at Jefferies. "He is sending a clear message: the economy is back to normal and we have to get policy back to normal."
The central bank has been struggling with too-low inflation. The personal consumption expenditures price index has been below the central bank’s 2 per cent target for most of the past five years.
“We anticipate that inflation on a 12-month basis will move up this year and stabilise around the FOMC’s 2 per cent objective over the medium term,’’ Mr Powell said.
He said the lag in wages during the expansion was due to low gains in output per hour, or productivity, though a new wave of investment spending "should support higher productivity growth in time".
_______________
Read more:
UAE likely to follow Fed in hiking interest rates this year
How will higher interest rates affect your finances in the UAE?
_______________
"Wages should increase at a faster pace as well," Mr Powell said. He said the FOMC continued to view the shortfall in inflation last year "as likely reflecting transitory influences that we do not expect will repeat".
The economy will expand at 2.7 per cent rate this year, according to the median estimate in a Bloomberg survey, while headline inflation will rise to 1.9 per cent.
“The comprehensive tax reforms passed at year-end 2017 provide significant fiscal stimulus to the economy, and the recent budget agreement further stiffens fiscal tailwinds over the medium term," said Carl Riccadonna, chief US economist at Bloomberg Economics
US central bankers predicted they would increase the benchmark lending rate three times this year in their December forecasts, and investors widely expect the central bank will act at its policy meeting next month. Faster growth may test that gradual pace after years of modest economic performance.
A brightening economic outlook, and the possibility that it could prod the Fed to raise rates at a faster pace, have prompted a reaction in financial markets also adjusting to the prospects of stepped-up US government debt issuance to fund a widening budget deficit.
Yields on US government 10-year notes fell slightly Tuesday to 2.85 per cent after orders for business equipment at US factories unexpectedly declined. The S&P 500 Index opened little changed at 2781.11 at 9.41am New York time.
Who are the Soroptimists?
The first Soroptimists club was founded in Oakland, California in 1921. The name comes from the Latin word soror which means sister, combined with optima, meaning the best.
The organisation said its name is best interpreted as ‘the best for women’.
Since then the group has grown exponentially around the world and is officially affiliated with the United Nations. The organisation also counts Queen Mathilde of Belgium among its ranks.
RESULT
Brazil 2 Croatia 0
Brazil: Neymar (69'), Firmino (90' 3)
Breast cancer in men: the facts
1) Breast cancer is men is rare but can develop rapidly. It usually occurs in those over the ages of 60, but can occasionally affect younger men.
2) Symptoms can include a lump, discharge, swollen glands or a rash.
3) People with a history of cancer in the family can be more susceptible.
4) Treatments include surgery and chemotherapy but early diagnosis is the key.
5) Anyone concerned is urged to contact their doctor
At a glance
Global events: Much of the UK’s economic woes were blamed on “increased global uncertainty”, which can be interpreted as the economic impact of the Ukraine war and the uncertainty over Donald Trump’s tariffs.
Growth forecasts: Cut for 2025 from 2 per cent to 1 per cent. The OBR watchdog also estimated inflation will average 3.2 per cent this year
Welfare: Universal credit health element cut by 50 per cent and frozen for new claimants, building on cuts to the disability and incapacity bill set out earlier this month
Spending cuts: Overall day-to day-spending across government cut by £6.1bn in 2029-30
Tax evasion: Steps to crack down on tax evasion to raise “£6.5bn per year” for the public purse
Defence: New high-tech weaponry, upgrading HM Naval Base in Portsmouth
Housing: Housebuilding to reach its highest in 40 years, with planning reforms helping generate an extra £3.4bn for public finances
The National's picks
4.35pm: Tilal Al Khalediah
5.10pm: Continous
5.45pm: Raging Torrent
6.20pm: West Acre
7pm: Flood Zone
7.40pm: Straight No Chaser
8.15pm: Romantic Warrior
8.50pm: Calandogan
9.30pm: Forever Young
A MINECRAFT MOVIE
Director: Jared Hess
Starring: Jack Black, Jennifer Coolidge, Jason Momoa
Rating: 3/5
The biog
Born November 11, 1948
Education: BA, English Language and Literature, Cairo University
Family: Four brothers, seven sisters, two daughters, 42 and 39, two sons, 43 and 35, and 15 grandchildren
Hobbies: Reading and traveling
UAE currency: the story behind the money in your pockets
COMPANY PROFILE
Name: Kumulus Water
Started: 2021
Founders: Iheb Triki and Mohamed Ali Abid
Based: Tunisia
Sector: Water technology
Number of staff: 22
Investment raised: $4 million
SERIE A FIXTURES
Friday Sassuolo v Torino (Kick-off 10.45pm UAE)
Saturday Atalanta v Sampdoria (5pm),
Genoa v Inter Milan (8pm),
Lazio v Bologna (10.45pm)
Sunday Cagliari v Crotone (3.30pm)
Benevento v Napoli (6pm)
Parma v Spezia (6pm)
Fiorentina v Udinese (9pm)
Juventus v Hellas Verona (11.45pm)
Monday AC Milan v AS Roma (11.45pm)
Brief scores:
Kashima Antlers 0
River Plate 4
Zuculini 24', Martinez 73', 90 2', Borre 89' (pen)
In numbers: PKK’s money network in Europe
Germany: PKK collectors typically bring in $18 million in cash a year – amount has trebled since 2010
Revolutionary tax: Investigators say about $2 million a year raised from ‘tax collection’ around Marseille
Extortion: Gunman convicted in 2023 of demanding $10,000 from Kurdish businessman in Stockholm
Drug trade: PKK income claimed by Turkish anti-drugs force in 2024 to be as high as $500 million a year
Denmark: PKK one of two terrorist groups along with Iranian separatists ASMLA to raise “two-digit million amounts”
Contributions: Hundreds of euros expected from typical Kurdish families and thousands from business owners
TV channel: Kurdish Roj TV accounts frozen and went bankrupt after Denmark fined it more than $1 million over PKK links in 2013
Formula Middle East Calendar (Formula Regional and Formula 4)
Round 1: January 17-19, Yas Marina Circuit – Abu Dhabi
Round 2: January 22-23, Yas Marina Circuit – Abu Dhabi
Round 3: February 7-9, Dubai Autodrome – Dubai
Round 4: February 14-16, Yas Marina Circuit – Abu Dhabi
Round 5: February 25-27, Jeddah Corniche Circuit – Saudi Arabia
COMPANY%20PROFILE
%3Cp%3E%3Cstrong%3ECompany%20name%3A%3C%2Fstrong%3E%20OneOrder%3Cbr%3E%3Cstrong%3EStarted%3A%3C%2Fstrong%3E%20March%202022%3Cbr%3E%3Cstrong%3EFounders%3A%3C%2Fstrong%3E%20Tamer%20Amer%20and%20Karim%20Maurice%3Cbr%3E%3Cstrong%3EBased%3A%3C%2Fstrong%3E%20Cairo%3Cbr%3E%3Cstrong%3ENumber%20of%20staff%3A%20%3C%2Fstrong%3E82%3Cbr%3E%3Cstrong%3EInvestment%20stage%3A%3C%2Fstrong%3E%20Series%20A%3C%2Fp%3E%0A
If you go:
The flights: Etihad, Emirates, British Airways and Virgin all fly from the UAE to London from Dh2,700 return, including taxes
The tours: The Tour for Muggles usually runs several times a day, lasts about two-and-a-half hours and costs £14 (Dh67)
Harry Potter and the Cursed Child is on now at the Palace Theatre. Tickets need booking significantly in advance
Entrance to the Harry Potter exhibition at the House of MinaLima is free
The hotel: The grand, 1909-built Strand Palace Hotel is in a handy location near the Theatre District and several of the key Harry Potter filming and inspiration sites. The family rooms are spacious, with sofa beds that can accommodate children, and wooden shutters that keep out the light at night. Rooms cost from £170 (Dh808).
