U.S. economy ‘very strong’ despite market worries: Fed’s Quarles

NEW YORK (Reuters) – The U.S. economy and labor market are strong with inflation contained, even while financial markets have recently been focused on the risk that global economic growth will slow further, a Federal Reserve governor said on Thursday.

“Clearly markets are more attuned currently to downside risks but the core, base case remains very strong” for the U.S. economy, Randal Quarles, the central bank’s vice chair for supervision, said at an insurance industry conference.

“Inflation remains very well contained … and that’s a very good environment,” he said. “The data on the real economy…continues to look strong.”

The Fed raised interest rates four times last year including in December. But since then it has nodded to some of the concerns investors have raised since October, with Fed Chairman Jerome Powell taking more of a wait-and-see approach to further monetary tightening.

Quarles said financial markets are mostly reacting to “some doubt about the strength of continued global growth,” including in China and Europe, where data “suggests a little bit less growth in the near term in those jurisdictions.”

“But even there certainly you can see a narrative where that recent data is a result of transitory factors, and we can get to the other side of that,” he added at the Insurance Information Institute.

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