The benchmark lending rate is currently in a target range of 1 percent to 1.25 percent. A December increase would represent the third tightening of policy this year and only the fifth rate hike since the expansion began in mid-2009.
“He showed himself to be following the model of a successful Fed chair who never says ‘mission accomplished.’ You have to be open-minded about your definition of resource slack,” said Vincent Reinhart, chief economist at Standish Mellon Asset Management LLC in Boston. “You can’t be sure you’ve eliminated slack when you don’t see inflation.”
Powell, 64, repeatedly ducked questions about the economic impact of tax cuts being debated in Congress. He sailed through about two hours of questioning with few signs that his confirmation would fail to pass the committee.
On the regulatory front, Powell told the senators that he wouldn’t call what he has in mind “deregulation,” but instead characterized it as reviewing and re-writing rules established since the 2008 financial crisis to make them more efficient.
Powell told Democratic Senator Elizabeth Warren that regulations are “tough enough.” He expects to be “well aligned” with new Vice Chairman for Supervision Randal Quarles, who is a long-time friend and fellow Treasury Department veteran.
Powell also tried to put another post-crisis legacy to rest, saying he no longer thinks any of the large U.S. banks are “too big to fail” -- as long as the regulators keep their Dodd-Frank Act power to dismantle a collapsing firm without letting it go through bankruptcy. The bankruptcy courts are supposed to be the favored option, but Powell said they may not be able to handle the load in a “very stressful situation.”
Asked if he’s prepared to become the world’s most influential central banker, Powell hesitated briefly before coolly stating, “I feel fine about it.”
This article was provided by Bloomberg News.