At that meeting, FOMC officials indicated they were likely to approve two more rate increases, bringing the 2018 total to four. Markets, though, have remained unconvinced, with the futures market assigning just a 50.9 percent to a fourth hike, according to the CME’s FedWatch tool.
Powell spoke at length about the jobs market, saying that although wage pressures remain moderate there’s still good reason to believe the economy is nearing full employment. The unemployment rate is at 3.8 percent, tied for the lowest rate since 1969.
“Today, most Americans who want jobs can find them,” he said. “High demand for workers should support wage growth and labor force participation.”
As he has in the past, Powell stressed the need not to let accommodative policy in place too long.
He pointed out that the last two recessions were caused by “financial imbalances” rather than inflation — the financial crisis of 2008 and the dotcom implosion in the early 2000s. However, he said he doesn’t see anything worrisome from asset prices at present.
“While some asset prices are high by historical standards, I do not see broad signs of excessive borrowing or leverage. In addition, banks have far greater levels of capital and liquidity than before the crisis,” Powell said.
While he said there remains uncertainty around monetary policy, the case for interest rate hikes is solid, a position he said is supported “broadly” by FOMC members.