Fed officials grew especially sensitive to global developments previous year in part because weaker inflation overseas has made it much harder for the Fed to keep inflation at its 2% goal.
Admitting he was 'straying a bit from his remit, Bank of England governorr Mark Carney also backed the United Kingdom government's new spending programme.
"The message from the testimony from a monetary policy standpoint is that Powell believes the economy is in good shape, but that the specter of a worsening coronavirus, if that indeed happens, could force the Fed's hand and result in easing", said Robert Johnson, Professor of Finance at Heider College of Business, Creighton University, in an email to The Epoch Times.
Despite a record US expansion, the Fed's benchmark rate is in a range of 1.5 per cent to 1.75 per cent following three cuts in 2019. "Low rates are not really a choice anymore, they are a fact of reality". Both emphasized the Fed's accountability to Congress, which oversees the central bank. "I think it's very much incumbent on us and other central banks to understand the costs and benefits and tradeoffs associated with a possible digital currency", said Powell.
"It's critical to have diverse perspectives", Powell said. But traders on Wednesday bought out-of-the-money December and March eurodollar call options with a strike price of 99.50, according to people familiar with the matter who asked not to be identified because they're not authorized to speak publicly.
Separately, on Tuesday, Federal Reserve Bank of St. Louis President James Bullard said the Fed has "a reasonable chance" to achieve a soft landing.
Mr. Powell updated lawmakers Tuesday on why the Fed is considering changes to its inflation-targeting framework.
'Putting the federal budget on a sustainable path when the economy is strong would help ensure that policy makers have the space to use fiscal policy to assist in stabilizing the economy during a downturn, he said.
Over in the eurozone, the latest data on industrial production is due to be released.
There are dangers for the Fed in collaborating too closely with elected officials because it could undermine its political independence.
But the president is not alone in seeking favours from the Fed. Markets will be most interested in hearing about potential changes to the U.S. central bank's inflation targeting regime.