He also warned lawmakers the economy would need support from fiscal policy in the event of a downturn, and pressed them to put the federal budget on a sustainable path.
The White House on Monday released President Donald Trump’s proposed 2021 federal budget, which included deficit spending of about $1 trillion. Trump has repeatedly criticized Powell for not lowering interest rates further.
Coronavirus emerged as an economic threat in recent months just as the global outlook was beginning to brighten. Powell and his colleagues cut rates three times in 2019 to guard against the risks posed by trade tensions, slow global growth and below-target inflation. Since late last year, however, Fed officials have said monetary policy was in a good place and would remain unchanged unless their outlook for the economy changed materially.
Completion of the China phase-one trade deal, Britain’s avoidance of a sudden, no-deal exit from the European Union and a slight improvement in global manufacturing data pointed to a more stable outlook for 2020 after a decidedly rocky 2019.
“Some of the uncertainties around trade have diminished recently, but risks to the outlook remain,” Powell said.
This story provided by Bloomberg News.