(Reuters) – Federal Reserve Chair Jerome Powell on Wednesday reiterated his confidence in the U.S. economic outlook, even as he said he expected some drag “soon” from China’s new coronavirus epidemic and called out the threat from income inequality and an expanding federal debt.
“There’s no reason why the current situation of low unemployment, rising wages, high job creation – there’s no reason why it can’t go on,” Powell told the Senate Banking Committee in his second day of congressional testimony.
The record-long U.S. economic expansion is now in its 11th year. U.S. wages are now growing at about a 3% annual pace, the unemployment rate is 3.6%, and job growth has more than kept up with an increase in the workforce.
“There is nothing about this economy that is out of kilter or imbalanced,” Powell said.
His remarks underscored the central bank’s view that its current target range for short-term borrowing costs, between 1.5% and 1.75%, is the right setting to keep the expansion on track.
But he also said the Fed is keeping close tabs on the epidemic of flu-like illness that has killed hundreds and sickened tens of thousands of people since January, nearly all in China.
“We do expect that there will be some effects” on the U.S. economy, Powell said, adding that he expects to begin seeing these reflected in economic data “relatively soon.”