Fed Chair Powell: Policy likely appropriate, barring material reassessment

Jerome Powell, Chairman of the Federal Reserve, will say that the current policy of the bank is appropriate barring a material reassessment. The Fed is closely monitoring the coronavirus risks that could cause disruption at the epicenter of the disease in China and could have spillovers.

Powell is upbeat on the economy, saying that fundamentals are supporting household spending are still strong. Economic activity has increased in the second half of 2019 and the economy is showing resilience to global headwinds.

Inflation is set to move closer to the 2% goal in the coming months. 

EUR/USD has dipped below 1.09 ahead fo the publication and the greenback retains its strength in general.

Key takeaways

"Fed will respond accordingly if developments emerge to cause a material reassessment of the outlook."

"Economic activity increased at moderate pace in the second half of 2019 as economy appeared resilient to global headwinds."

"Fundamentals supporting household spending remain solid; business investment and exports have been weak, largely reflecting sluggish growth abroad and trade developments."

"Some uncertainties around trade have diminished recently but risks to the outlook remain."

"Fed is closely monitoring the coronavirus which could lead to disruptions in china that spill over to the global economy."

"Fed expects inflation to move closer to 2% over the next few months as unusually low readings from early 2019 drop from the 12-month calculation."

"Finding ways to boost labor force participation and productivity should remain a national priority."

"Low-interest rate environment may limit the ability of central banks to reduce policy rates enough to support economy during downturn."

"A more sustainable federal budget path would give policymakers space to use fiscal policy in a downturn and support the economy's growth over the longer term."

"Treasury bill purchases, repo operations have been successful in providing ample reserves to the banking system."

"Fed intends to gradually transition away from active use of repos."

"Measures are not intended to represent a change in the stance of monetary policy; fed stands ready to adjust operations as conditions warrant."