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Powell: Threats From Global Slowdown   11/15 06:23

   WASHINGTON (AP) -- Federal Reserve Chairman Jerome Powell said Wednesday 
that the U.S. economy is performing well but he's eyeing potential risks ahead.

   Those include a slowdown in global growth, the fading impact from tax cuts 
and the cumulative weight of the Fed's own interest rate hikes.

   Speaking to an audience at the Federal Reserve Bank of Dallas, Powell said 
the Fed is managing interest rates in an effort to prolong the current economic 

   The increased political attacks on the Fed will not divert the central bank 
from doing its job, he said. President Donald Trump has called the Fed's rate 
hikes his "biggest threat."

   The Fed has the tools and the protections it needs to serve the public in a 
"non-partisan, professional way," Powell said.

   None of Powell's comments indicated the central bank would stray from 
expectations that at its December meeting it will hike rates for a fourth time 
this year. The Fed left rates unchanged at its meeting last week.

   Powell said the Fed is raising rates slowly in an attempt to avoid the 
mistake of hiking them either so quickly that it pushes the economy into a 
recession, or moving too slowly and allowing inflation to get out of control.

   This gradual approach has translated into a total of eight quarter-point 
rate hikes since the Fed began raising rates in late 2015. Those came after 
seven years in which the Fed kept its key policy rate unchanged near zero in an 
effort to lift the country out of the deepest recession since the 1930s.

   Those hikes have pushed the Fed's key policy rate to a range of 2 to 2.25 
percent. The Fed has signaled that it expects to raise rates one more time this 
year and three more times in 2019.

   During the recent turbulence in stock markets, Trump grew increasingly 
pointed in his criticism of the Fed's moves, saying they risked undoing his 
efforts to boost the economy with tax cuts and were not needed because 
inflation remains low.

   Powell said political criticism would not affect the Fed's policies.

   "We have an important job that Congress has assigned. We have the tools to 
do it and we have the protections to do it," Powell said.

   He also stressed that in his view "our economy is in such a good place right 
now," citing low unemployment and strong growth.

   Asked what headwinds he saw, Powell said that the current global slowdown is 
a concern. He also noted expectations that the strong support the U.S. economy 
has received from the $1.5 trillion tax cut Trump pushed through Congress last 
December and a big boost in government spending will fade.

   That could be happening in the next year or so, he said.

   Powell said that the effects of the Fed's gradual but steady rate hikes 
could also act to slow growth.

   At another point, he was asked about the old Wall Street adage that bull 
markets don't die of old age but rather get killed by the Federal Reserve.

   Powell said that is not the Fed's aim. He said the central bank is trying to 
raise rates in a gradual way in order to extend the current expansion, now the 
second longest on record.


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