Powell Says Case ‘Coming Together’ for December Rate Hike

Updated on
  • Trump Fed chief pick sees conditions right for tighter policy
  • Powell sails through questions from Senate Banking Committee
Powell Says Case for Dec. Rate Hike Coming Together

Jerome Powell, nominated for Federal Reserve chairman, told lawmakers the case for raising interest rates at next month’s policy meeting is strengthening, as the labor market improves without spurring the U.S. economy to overheat.

Powell was picked by President Donald Trump to replace Janet Yellen when her term ends in February. He spoke Tuesday at his confirmation hearing in Washington before the Senate Banking Committee. The Fed will hold its final policy meeting of the year from Dec. 12-13.

“I think the case for raising interest rates at our next meeting is coming together,” Powell said under questioning by Senator Dean Heller, a Nevada Republican. “Conditions are supportive of doing that.”

Powell, who has served as a Fed governor since 2012, said he couldn’t guarantee that he would vote for a rate increase because he had to hear the views of his Federal Open Market Committee colleagues at the meeting.

Futures markets are pricing in about a 93 percent probability of a December rate increase.

“We don’t see the Fed’s current path of interest rates the next few years changing much under a Fed Chairman Powell,” Chris Rupkey, chief financial economist at MUFG Union Bank NA, said in a note to clients.

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.

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.

— With assistance by Jeanna Smialek, and Christopher Condon

    Before it's here, it's on the Bloomberg Terminal.
    LEARN MORE