Powell urges congressional panel to tackle budget deficits

Washington – Federal Reserve Chairman Jerome Powell is asking Congress to tackle the growing budget deficit.

Powell’s remarks before the House Budget Committee Thursday came a day after he told Congress’ Joint Economic Committee that the Fed was likely to keep rates unchanged in the coming months, unless there was a “material” shift in the economy’s outlook.

Powell is one of the few leading public figures urging Congress to reduce the federal government’s annual deficit, which is nearing $1 trillion.

A large deficit will make it harder for Congress to cut taxes or boost spending when the next recession hits, Powell said. That is a concern because with the Fed’s benchmark interest rate already low, the Fed also has a limited ability to respond to downturns.