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US to face long period of weak growth
11-08-2016 09:19
US to face long period of weak growth
US to face long period of weak growth

According to Jerome Powell, a member of the Fed's Board of Governors, US economy will witness a prolonged period of subdued growth that will require lower interest rates. The Federal Reserve policymaker also noted that the risk is increasing and that the US outlook is weighed down by global risks. Mr Powell said he sticks to a “very gradual” path for raising rates especially since inflation is below the target level. Currently, he is more concerned about the longer-term US growth than about potential market losses. According to the majority of US economists, a threat of lower growth for a long period of time becomes more real in the US. To achieve economic growth forecasts, Fed rates will “just have to be lower than I thought,” Jerome Powell said. “I don’t think that process is over,” Mr Powell added. “The median estimate on the committee is 3 per cent for the long-term federal funds rate. It could be lower than that, in my view.” In December 2015, the FOMC raised its federal funds rate to 0.25-0.50%, for the first time in nine years. For a rate increase, Jerome Powell said strong growth in employment and demand are needed as well as inflation heading back to 2% and no obvious “global risk events.”

*The market analysis posted here is meant to increase your awareness, but not to give instructions to make a trade.

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