US Federal Reserve chair Jerome Powell speaks at Economic Club

US Federal Reserve chair, Jerome Powell, recently spoke at the Economic Club in Washington, D.C. He made dovish comments about Fed policy and the stock market.

Why Powell may be softening on Fed policy

The Fed chair may be dovish on interest rates because of the last interest rate hike affecting the US stock market. Though the Federal Reserve was likely to increase interest rates twice in 2019, there may be a change in those plans. After signals that the US central bank may delay rate hikes, Powell is likely to base interest rate policy on the developments on Wall Street. He said during a question-and-answer period at the Economic Club that,'We're [The Fed] waiting and watching to see what happens.'

Powell speaks about US markets, government shutdown, Chinese economy

The Federal Reserve raised interest rates in 2018 because the bank felt the economy was strong. However, the volatility of the stock market in recent months has led to speculation that the Fed may delay rate hikes, especially if the US economy slows down. Powell was asked about how the US government shutdown could affect the overall economy. He said that a prolonged government stoppage could eventually show up in US economic data.

'In the short term, government shutdowns don't last very long. They typically have not left much a market on the economy, which isn't to say, there's plenty of personal hardships that people undergo. If we have an extended shutdown, I do think that would show up in the data pretty clear,' said Powell.

Powell also noted that the slowdown in Apple iPhone sales in China means that the Asian nation's economy is in a downturn. He also spoke about how the slowdown there could be part of a global problem.

'The principal worry I would have is really global growth. If you look at Asia, Europe, you're seeing slowing in growth. The question would be how does that affect us.It's a tightly integrated global economy, global markets, and we will feel that,' said the Fed chair.

Fed chair expresses concern about debt

Powell spoke about the growing US government debt and how it could affect the US economy.

'I'm very worried about it. From the Fed's standpoint, we're really looking at a business cycle length: that's our frame of reference. The long-run fiscal, non-sustainability of the U.S. federal government isn't really something that plays into the medium-term that is relevant for our policy decisions', said Powell.