Federal Reserve Chair Powell: Household Debt Is Healthy

During the the first of two days of his semiannual testimony before Congress lastTuesday, Federal Reserve Chairman Jerome Powell said that “crosscurrents and conflicting signals” are warranting a patient approach with respect to interest rate policy.

In a prepared testimony to Congress, Powell said that domestic and global developments have “along with ongoing government policy uncertainty, warranted taking a patient approach with regard to future policy changes.” Furthermore, Powell said that economic data will continue to be the primary driver in future Fed decisions, but will be more flexible with the inclusion of new data.

“Going forward, our policy decisions will continue to be data dependent and will take into account new information as economic conditions and the outlook evolve,’’ Powell told the Senate Banking Committee. “We’re in no rush to make a judgment about changes in policy.”

In day two of his semiannual testimony to Congress, Federal Reserve Chairman Jerome Powell said that the central bank is close to its timetable of ending its balance sheet reduction. Powell is referring to the central bank’s holdings of about $3.8 trillion in bonds, which it has steadily been reducing since October 2017.

A separate statement last month alluded to a more flexible Fed that would be more strategic with regard to its balance sheet policy. The Fed is reducing its balance sheet by a maximum of $50 billion in proceeds from the sale of bonds, which it will use for reinvestment.

“We’re close to agreeing on a plan which would light then way to the end of the process,” Powell said during testimony before the House Financial Services Committee.

In the video below, Federal Reserve Chair Jerome Powell responds to questions on Capitol Hill about the amountof personal debt being taken on.

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