Published: Fri, July 12, 2019
Markets | By Otis Pena

Powell on unemployment and inflation

Powell on unemployment and inflation

Whether it's climate change, the gold standard or how "hot" the economy is, they both go in different directions.

In the Fed's monetary policy report issued last week ahead of Powell's testimony, the trade war received its own analysis, a sign of the attention it is getting within the central bank.

Meanwhile, brushing aside repeated criticism from President Trump, . But it's hardly the most significant way in which the two men disagree.

Powell used an appearance before his congressional overseers on Wednesday to confirm that the USA economy is still under threat from disappointing factory activity, tame inflation and a simmering trade war.

How hot is this economy?

"We need a better strategy than that", he said.

Testifying before the U.S. House Committee on Financial Services on Wednesday, .

Higher open likely for the U.S markets Thursday after Fed chief Jerome Powell's testimony seemingly lifted markets with expectations on a rate cut. "For central banks like the Federal Reserve or European Central Bank, there is too much global reliance on the stability of asset prices in order to dramatically surprise market participants". Mr. Trump himself has been equivocal on the gold standard, but he advocated for it on the campaign trail. "Without it, it will be very hard to achieve". "We don't have that anymore".

There was a rub-off on the government bonds as well, with the 10-year bond gaining slightly to 6.555% yield to an earlier rate of 6.544%. Tying the dollar's value to gold limits the supply of dollars, and it would reduce the Fed's ability to respond to economic downturns.

Gunmen massacre 18 in Papua New Guinea
He said some of them had been chopped into pieces and their body parts were hard to recognise. It is far one in all the worst outbreaks of tribal violence in PNG for years.

"While that's a constructive step, it doesn't remove uncertainty we see as overall weighing on the outlook", Powell said Wednesday in response to a question posted by Rep. Carolyn Maloney (D-NY). "He has provided a loser monetary policy base for gold prices gain further", noted Howie Lee, an economist with OCBC Bank.

Who can fire the Fed chair?

"He's not doing that". Waters asked Powell on Wednesday. "To me, it all depends on where you look in the economy".

"My answer would be no", Mr Powell reiterated.

"And you would not pack up and you would not leave?"

"The relationship between unemployment and inflation became weak" about twenty years ago, Powell told the Senate Banking Committee Thursday.

There is one area where the president, the chairman and most modern economists agree: The fear of high inflation is a thing of the past.

Most Americans, of course, prefer low prices.

Historically, conservatives have preferred to maintain low inflation, while liberals were more concerned with employment. "Even on the more dovish side of the spectrum, the voices have been lukewarm".

The minutes echoed that sentiment: "several participants pointed out that they had revised down their estimates of the longer-run normal rate of unemployment and, as a result, saw a smaller upward contribution to inflation pressures", and a better case for lower rates.

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