AtlantaFederal Reserve Chairman Jerome Powell urges caution in light of the record levels of corporate debt. The situation is not comparable to the conditions on the US mortgage market, which would have led to the financial crisis of 2007 to 2009, Powell said on Monday. Moreover, corporate loan growth is in line with economic growth and the financial system is better able to handle losses.
However, he pointed to a lack of transparency in corporate debt and rising risks as growth slows. "Corporate debt has reached a level that should give companies and investors a reason to pause and think."
For the time being, US central bankers have paused for the first time after a hefty interest-rate firing of nine hikes within three years, leaving the key monetary policy rate in the range of 2.25 to 2.5 percent. The reason they cite the uncertain economic outlook, which are also clouded by the US trade dispute. However, it is too early to judge the impact of the trade dispute on monetary policy, Powell said.