Fed Chief Jerome Powell says Apple’s iPhone sales warning shows China economy is slowing

Finance


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Federal Reserve Board Chairman Jerome Powell speaks during a news conference on December 19, 2018 in Washington, DC. The US Federal Reserve raised the short-term interest rates by a quarter percentage point on Wednesday, the fourth increase of the year, and signaled two more hikes could come in 2019.

Federal Reserve Chairman Jerome Powell said Thursday that Apple’s recent sales warning points to a slowdown in the Chinese economy.

“The Chinese economy is slowing down. It’s showing up a lot in consumer spending,” Powell said. “Weak retail spending; everyone has seen the Apple news.”

Last week, Apple slashed its quarterly revenue guidance, citing an unexpected slowdown in China.

“The principal worry I would have is really global growth. If you look at Asia, Europe, you’re seeing slowing in growth. The question would be how does that affect us,” Powell said at The Economic Club of Washington, D.C. “It’s a tightly integrated global economy, global markets, and we will feel that.”

His comments come after the Fed minutes from the central bank’s December meeting confirmed it would be patient in raising rates.

The Fed raised its benchmark overnight lending rate four times in 2018 as a part of its goals of maximizing employment and keeping prices in check. Powell and his colleagues have cited months of strong labor statistics and healthy GDP numbers while hiking rates.

However, tepid inflation and concerns surrounding the longevity of the current economic expansion have prompted backlash from some market participants. Fears that policymakers may be elevating borrowing costs at too quick a pace contributed to a broad stock sell-off in the fourth quarter of 2018.

—CNBC’s
Tom Franck
contributed to this report.

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