Powell Sees Rates Rising Somewhat Further, Core Reforms Retained

Jerome Powell, President Donald Trump’s nominee to head the Federal Reserve, said he expected the central bank to continue raising its benchmark interest rate and trimming its balance sheet under his leadership.

“Our aim is to sustain a strong jobs market with inflation moving gradually up toward our target,” Powell said in the text of remarks he’ll deliver Tuesday in a confirmation hearing before the Senate Banking Committee. “We expect interest rates to rise somewhat further and the size of our balance sheet to gradually shrink.”

Powell also pledged to protect financial stability through the Fed’s role as a banking regulator, even as he spoke of refining post-crisis regulatory reforms.

“Our financial system is without doubt far stronger and more resilient than it was a decade ago,” he said. “We will continue to consider appropriate ways to ease regulatory burdens while preserving core reforms.”

Powell is likely to face questions from the panel over how intends to extend the third-longest economic expansion in U.S. history and how far he’ll go in lightening the burden of rules imposed on the financial system following the crisis of 2008-09.

Where his predecessor, Janet Yellen, inherited a still-deeply damaged economy in 2014, Powell will be tasked mainly with preserving the gains made since. If confirmed, Powell will take over with unemployment near at a 16-year low and inflation below the Fed’s 2 percent target.

Powell said that, if confirmed, he’ll strive “to support the economy’s continued progress toward full recovery.”

“Even as we draw on the lessons of the past, we must be prepared to respond decisively and with appropriate force to new and unexpected threats to our nation’s financial stability and economic prosperity,” he said.