Tue, Feb 13, 2018 - Page 14 News List

Powell takes over at Fed as US economy primed to heat up
鮑爾接下任美國聯準會主席 經濟升溫

Jerome Powell, right, is sworn-in as the new chairman of the US Federal Reserve in Washington on Monday last week.

Photo: AFP

It’s been a long time since an incoming Federal Reserve leader had it this good.

Jerome Powell was sworn in on Monday last week as the 16th chairman of the Fed, on the day after his 65th birthday. He’s inheriting a US economy in its third-longest expansion on record, with unemployment and inflation near historically low levels.

Global growth has picked up, jobs gains continue at a robust monthly pace, business investment has risen in recent months and Congress has just passed a set of tax cuts.

“Global growth feels more powerfully coordinated than it has in a long time and inflation remains low,” said Carl Tannenbaum, chief economist at Northern Trust Corp. and a former Chicago Fed staffer.

Still, the new Fed chief likely has trouble headed his way as he tries to keep the economy from overheating or getting cold. A US stock market that’s roared to record highs in recent months is waking up to the risks: The Dow Jones Industrial Average tumbled 666 points on Feb. 2, the biggest drop since June 2016.

It’s not just that inflation has languished below target. A deeper concern is that economists don’t completely understand why. The nation’s unemployment rate has fallen to 4.1 percent, less than half its crisis-era peak. That’s well below where most experts believed it would begin to provoke higher wages and inflation.

This complicates Powell’s task in contemplating how fast to raise interest rates as the economy gains momentum. In December, the median projection from Fed officials called for three quarter-point interest rate increases in 2018, but more could be needed.





1. Federal Reserve phr.


(mei3 guo2 lian2 bang1 zhun3 bei4 li3 shi4 hui4)

2. unemployment rate phr.


(shi1 ye4 lu4)

3. inflation rate phr.


(tong1huo4 peng2 zhang4 lu4)

4. business investment phr.


(shang1 ye4 tou2 zi1)

5. tax cut phr.


(jian3 shui4)

6. raise an interest rate phr.


(sheng1 xi2)







Follow up


1. Central banks use interest rates as a key tool for managing their respective economies, true or false?

2. Why do central banks closely monitor inflation and unemployment rates when setting interest rates?

3. Why to central banks typically cut interest rates when inflation in an economy falls below a given minimum level (usually 2 percent)? What effect will this have on the economy?

4. During a period of steady economic growth, central banks usually increase interest rates to keep inflation under control, true or false?

(Edward Jones, Taipei Times)

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