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Warsh: The world is experiencing a global investment boom
Economy
Federal Reserve Chairman Kevin Warsh told G20 financial leaders on Monday
that the global economy is experiencing a global investment boom that is driving growth. He said this marks a shift from the previous era of savings gluts, when capital was trapped in low-yielding instruments.
Warsh, who took over the U.S. central bank in May, spoke at the opening of the G20 summit in Asheville, North Carolina—his first international economic policy meeting as Fed chairman. He noted that he looks forward to learning more about the growth prospects of member countries.
The Fed chairman recalled that at previous G20 meetings—both before and after the 2008 global financial crisis—participants discussed a "global savings glut," but now the situation has reversed.
"If you try to characterize the current moment, it's a moment of global investment boom," Warsh said. He also added that the concept of "secular stagnation," which suggests slowing growth due to a lack of innovation, is no longer applicable to the modern economy.
Warsh arrived at the G20 meeting directly from the annual central bankers' conference in Jackson Hole, Wyoming, where he made clear that the Fed still has "much to do" if policymakers are not confident that inflation is moving toward its 2% target.
In his first extended comments on the economy as Fed Chair, Warsh came closer than ever to acknowledging that raising interest rates may be necessary to reduce price pressures.