Longer US government shutdown will hit economy, says Fed chief

Longer US government shutdown will hit economy, says Fed chief

The Fed chair, who has been publicly criticised repeatedly by President Donald Trump in recent months, warned that if there is an "extended shutdown", it would have an impact on the economy that "would show up in the data very clearly".

On Thursday, Powell said he hasn't seen anything to indicate that the risk of a recession is elevated. Right now, the Fed doesn't see evidence of either.

After four rate hikes past year, the Fed would be "bordering on going too far and possibly tipping the economy into recession" if rates go higher, Bullard said, adding that he would be willing to cut interest rates if needed.

"I'm very anxious about it", the Fed chief told participants of The Economic Club of Washington, DC on Thursday.

"Growth prospects in other economies around the world have moderated somewhat in recent months, and overall financial conditions have tightened materially, " he said in the text of a speech late Thursday in NY.

He also anxious about the lack of key economic statistics during the government shutdown that the Fed uses to take the temperature of the economy.

The balance sheet "will be substantially smaller than it is now", though bigger than it was before the crisis, Powell said.

Powell also noted that it's a problem that the Commerce Department is mostly shuttered, which means key economic data such as retail sales and growth in gross domestic product won't be released later this month unless the government reopens.

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"We do not take political factors into consideration in our discussions or decisions at all".

Powell also said he didn't think it would be appropriate to reject an invitation to meet with Trump, but he hasn't yet received such an invitation.

But when Rubenstein asked if he'd be happy to accept an invitation, Powell simply repeated: "I'm not aware of anyone not accepting it".

While markets may be concerned about global trade tensions and slower growth overseas, Powell said there is no evidence of a USA recession on the horizon.

"There are some who seem determined to talk us into a downturn", Thomas J. Donohue, president of the US Chamber, said in a speech Thursday.

Fed policy makers projected above-trend economic growth for this year in their December forecasts, and they expect the unemployment rate to fall further. "We're waiting and watching".

"Chairman Powell chose to make no news at his latest interview". The Fed chief will be in focus again this afternoon as he fields questions at the Economic Club of Washington.

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