US Fed chief Powell stays on middle path

Balancing inflation, job risks is priority

- HOWARD SCHNEIDER

Chair Jerome Powell said on Tuesday the central bank needed to continue balancing the competing risks of high inflation and a weakening job market in coming interest rate decisions, even as his colleagues staked out arguments on both sides of the policy divide.

“Near-term risks to inflation are tilted to the upside and risks to employment to the downside — a challenging situation,” Mr Powell said in remarks that stuck close to language used last week when the central bank cut its benchmark rate a quarter of a percentage point.

The current rate, in the range of 4% to 4.25%, is still considered high enough to lean against price pressures in the economy, but “leaves us well positioned to respond to potential economic developments. Our policy is not on a preset course,” Mr Powell said.

While that phrase is something of a mantra for central bankers, it has taken on particular resonance now, with strong opinions emerging on both sides of the policy divide.

In remarks before Mr Powell spoke on Tuesday, Fed Vice Chair for Supervision Michelle Bowman said the Fed could downplay concerns about persistent inflation and needed to make a commitment to cut rates in support of a job market she worries may be about to rupture.