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New policies could take weight off Fed

Reuters CHICAGO (Reuters) — A push by Washington for more business-friendly regulation and fiscal support for the economy could improve the United States’ mix of policies which in recent years have relied too much on the Federal Reserve Board, Fed Gov. Jerome Powell said.

Powell, speaking on Saturday at a conference, did not mention the incoming Trump administration by name but his comments suggest some Trump policies will be welcomed by U.S. central bankers who have been urging other institutions to do more to help the economy.

“We may be moving more to a more balanced policy with what sounds like more business-friendly regulation and possibly more fiscal support,” Powell told an economics conference in Chicago.

President-elect Donald Trump, who takes office on Jan. 20, has promised to double the United States’ pace of economic growth, “rebuild” its infrastructure and slash regulatory burdens.

About half of the Fed’s 17 policymakers factored a fiscal stimulus into their economic forecasts published in December, according to minutes from the Fed’s December policy meeting. That expected stimulus has led several policymakers to say the Fed will likely raise rates more quickly, but Powell said new policies could also ease the Fed’s burden.

“Monetary policy [might be] able to hand it off and I think that’s a healthier thing,” he said. “We may be moving to a more balanced policy mix.”

Following a Congress-enacted fiscal stimulus during and immediately after the 2007-2009 recession, the Fed in recent years has been widely seen as the economic authority working the hardest to help the economy.

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