Saul Loeb | AFP | Getty Images
Federal Reserve Chairman Jerome Powell speaks during a discussion at the Economic Club of Washington on January 10, 2019, in Washington, DC.
Federal Reserve Chairman Jerome Powell said Wednesday afternoon that the American economy will recover most of the lost economic output lost during the federal government’s partial shutdown.
“I think important – probably less important now – has been the shutdown, which will leave some sort of imprint on first-quarter GDP,” Powell said during a press conference. “We don’t know the ultimate resolution of it. If that’s all there is and the shutdown is gone and there isn’t another shutdown, we’ll get most of [the lost growth] back in the second quarter.”
The Federal Reserve said earlier Wednesday that it will be “patient” when making decisions about future monetary policy. The Fed also removed reference to “further gradual increases” to the federal funds rate in its statement, a signal some market participants took to mean that it may slow the pace of interest rate increases in 2019.
Powell first introduced that the Fed could have “patience” when he sat on a panel with former Fed chairs Ben Bernanke and Janet Yellen in early January, a soothing phrase for many market participants who took it as a sign that the Fed may be nearing the end of its gradual rate increases. The Fed increased rates four times in 2018.
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