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Economy

US Fed Chair Jerome Powell sets Fed's course with data-based judgment

Updated : August 27, 2018 07:09 AM IST

With unemployment at 3.9 percent - below what most economists believe is sustainable — and inflation near the Fed’s 2 percent goal, the economic terrain looks less fragile.
Powell has laid out an approach he sees suitable to that new terrain. It relies on using judgment to balance risks on both sides, and he cautioned against relying too much on roughly estimated variables like the so-called neutral rate of interest.
Powell leaned heavily on the idea that policymakers would have to feel their way to their destination, citing incidents from Fed history in which reliance on technical estimation led the central bank astray, while reliance on intuition led to better outcomes.
US Fed Chair Jerome Powell sets Fed's course with data-based judgment
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