Nov 28, 2018

Fed Chair Powell says interest rates now "just below" neutral level

Federal Reserve Chairman Jerome Powell. Photo: Alex Wong/Getty Images

Federal Reserve Chairman Jerome Powell said interest rates are "just below" the level that would neither promote nor restrict economic growth, according to a transcript of a speech he's set to give on Wednesday in New York.

"Interest rates are still low by historical standards, and they remain just below the broad range of estimates of the level that would be neutral for the economy — that is, neither speeding up nor slowing down growth."
— Federal Reserve Chairman Jerome Powell

Between the lines: Stocks jumped after the release of the speech, as investors assumed less rate hikes than originally anticipated will be necessary to get to the neutral level. This is a much less aggressive tone than Powell had in October, when he said in an interview with PBS that interest rates were "a long way from neutral."

Powell also addressed the Fed's first-ever "Financial Stability" report, released hours before Wednesday's speech:

  • He said that "overall financial stability vulnerabilities are at a moderate level," but also warned that high levels of corporate debt could "amplify" an economic downturn.
  • Powell added that he didn't "see vulnerabilities as elevated overall today in financial markets," and that equity prices are "broadly consistent with historical benchmarks."
  • The trade war, Brexit, and Italy's budget battle are among the risks Powell said could exacerbate stress to U.S. and global markets.

Go deeper: Jerome Powell's rough road

Go deeper

Updated 1 hour ago - Politics & Policy

Coronavirus dashboard

Illustration: Sarah Grillo/Axios

  1. Global: Total confirmed cases as of 3 p.m. ET: 6,703,686 — Total deaths: 393,393 — Total recoveries — 2,906,748Map.
  2. U.S.: Total confirmed cases as of 3 p.m. ET: 1,885,197 — Total deaths: 108,708 — Total recoveries: 485,002 — Total tested: 18,680,529Map.
  3. Public health: WHCA president says White House violated social-distancing guidelines to make reporters "a prop" — Jailing practices contribute to spread.
  4. States: Cities are retooling public transit to lure riders back.
  5. Jobs: Better-than-expected jobs report boosts stock market.
  6. Media: The Athletic lays off 8% of staff, implements company-wide pay cut.

Scoop: German foreign minister to travel to Israel with warning on annexation

Heiko Maas. Photo: Michael Kappeler/picture alliance via Getty Images

German Foreign Minister Heiko Maas is expected to travel to Israel next week to warn that there will be consequences if Israeli leaders move forward with plans to annex parts of the West Bank, Israeli officials and European diplomats tell me.

Why it matters: Israeli and European officials agree that if Israel goes ahead with unilateral annexation, the EU will respond with sanctions.

Minneapolis will ban police chokeholds following George Floyd's death

A memorial for George Floyd at the site of his death in Minneapolis. Photo: Steel Brooks/Anadolu Agency via Getty Images

Minneapolis has agreed to ban the use of police chokeholds and will require nearby officers to act to stop them in the wake of George Floyd's death, AP reports.

Why it matters: The agreement between the city and the Minnesota Department of Human Rights, which has launched an investigation into Floyd's death while in police custody, will be enforceable in court.