“Cyber is a relatively new kind of risk, with nation state actors and it’s now where the playbook is still being developed in real time.”
On the more conventional issue of monetary policy, Mr Powell repeated the central bank’s stance that it doesn’t “feel any hurry to change” interest rates, after four hikes in 2018.
“We see the economy as in a good place,” he said. “Inflation is muted and our policy rate we think is in an appropriate place.”
He said that over the past 90 days or so there has been growing evidence of a global slowdown.
“The principle risks to our economy now seem to be coming from slower growth in China and Europe, and also risk-events such as Brexit,” he said.
Mr Powell’s decision to agree to a rare edited primetime TV current affairs show appeared aimed at reasserting the Fed’s independence, which has come into question following a barrage of attacks last year by President Donald Trump. Mr Trump has described policy as too tight and accused the Fed of going “crazy”.
In a program in which he appeared at one point beside his two immediate predecessors, Janet Yellen and Ben Bernanke, Mr Powell gingerly handled questions about whether Mr Trump over-stepped the mark.
The chairman noted that his duty is one that Congress has given the central bank – of usings its tools to achieve maximum employment and stable prices.
Asked whether he could be fired by Mr Trump, Mr Powell said no.
“The law is clear that I have a four-year term and I intend to serve it,” he said.
He also noted that the Fed’s decisions can’t be reversed by any other arm of government.
Asked whether the US economy could generate annual gross domestic product growth of 4 per cent a year – something Mr Trump has pledged to deliver – Mr Powell warned that such a rate was unlikely to be sustainable given America’s current rates of population and labour force growth.
He noted that when the US economy used to generate rates of growth between 4 per cent and 5 per cent in the 1950s and 60s, the labour force was expanding at 3 per cent a year. That’s almost three times today’s rate.
“We have an older population now,” he said.
“Our labour force is growing more slowly . . . so it’s not likely that we could sustain the kinds of growth rates that we had when population and the labour force were growing more quickly.”
Mr Powell listed a series of reasons why America’s participation rate is now lower than almost every other country.
They included “evolving technology” that requires higher skill sets among workers; the fact that US “education attainment has not moved up as rapidly as it has in other countries”; globalisation and; even the opioid crisis that has affected “millions of people”.
“They tend to be young males. It’s a very significant problem and it’s part of a larger picture,” Mr Powell said.
“When you have people who are not taking part in the economic life of the country in a meaningful way, who don’t have the skills and aptitudes to play a role or who are not doing so because they’re addicted to drugs or in jail, then in a sense they are being left behind.”
from Credence news https://ift.tt/2SVCbJ1
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