Fed Vice Chair: "Patience is a Virtue" with Interest Rates

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The Fed's favourite inflation gauge, the personal consumption expenditures price index, clocked in at a 1.8 per cent year-over-year rate in November.

Wall Street traders see a 99.5 per cent chance the Fed won't hike at the end of January, according to data compiled by CME Group.

Larry Summers, a Harvard professor and former Treasury Secretary under former President Bill Clinton, said earlier this week that he thinks there's "better than a 50-50 chance" of a recession in 2020.

The Fed chief on Thursday again stressed that policymakers could take time to evaluate the economy before deciding on any additional rate moves.

"The long-run fiscal, nonsustainability of the US federal government isn't really something that plays into the medium term that is relevant for our policy decisions", Powell continued. There is good momentum going into this year.

"The principle worry I would have is global growth", Powell said.

"It'll be substantially smaller than it is now.but nowhere near where it was before", Powell said of the balance sheet, which began shrinking in October 2017.

In his remarks before the Economic Club of Washington, Powell described the economy as strong at the end of past year, with the lowest unemployment levels in a half-century and solid gains in wages.

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But he noted that the economic data would also be muddied because the shutdown is impacting the Commerce Department, which operates the Bureau of Economic Analysis and the Census Bureau.

"We are very focused on our job", Powell said.

But when Rubenstein asked if he'd be happy to accept an invitation, Powell simply repeated: "I'm not aware of anyone not accepting it".

Various factors that could pose downside risks for domestic economic growth and inflation were mentioned, including the possibilities of a sharper-than-expected slowdown in global economic growth, a more rapid waning of fiscal stimulus, an escalation in trade tensions, a further tightening of financial conditions, or greater-than-anticipated negative effects from the monetary policy tightening to date.

Powell's comments underscored the more wait-and-see approach to interest-policy that Fed officials have been discussing in this month.

"There are some who seem determined to talk us into a downturn", Thomas J. Donohue, president of the US Chamber, said in a speech Thursday.

"So what we're seeing - you would expect at a time like this revenues rising faster than spending, because the economy is strong, more people working, paying taxes, fewer people collecting unemployment benefits and such, and the deficit would shrink", he continued.

Since the December meeting, a rising number of policymakers, including Fed Chairman Jerome Powell, have argued for patience.

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