Federal Reserve Chairman's Magic Words Spur Stock Market Surge

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The rate increases have gradually raised borrowing costs for consumers and businesses. Markets have rallied this week after Powell signaled he'd be open to taking a go-slow approach on rate hikes.

As reported by the Washington Post, Trump once upon a time was considering Fed Chair during the Obama administration Janet Yellen to keep the post that Powell now holds.

The central bank is expected to raise rates once more next month, bringing the total to four this year.

Gold prices held firm on Thursday after notching up their biggest daily percentage gain in almost two weeks in the previous session, with the dollar easing on dovish comments from Federal Reserve Chair Jerome Powell.

"We know that moving too fast would risk shortening the expansion", Mr. Powell said.

Also that month, President Donald Trump called the Fed "crazy". That looks like too much of a pullback for some observers, who see the Fed revising its projections lower in December to a median of two hikes for 2019, from the current three.

Asked about GM's layoffs and recent declines on Wall Street, Trump laid the blame on Powell.

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While noting that some forms of corporate debt levels have become concerning, Powell the financial system and markets appear far sturdier than they did before the 2008 crisis.

Neither Clarida nor Powell said definitively whether rate hikes should stop at neutral, and each stressed that level was very hard to estimate.

"By clearly and transparently explaining our policies, we aim to strengthen the foundation of democratic legitimacy that enables the Fed to serve the needs of the American public".

Mr Powell "gave the market, and presumably President Trump, exactly what he wanted, which was an admission that the previously proposed path of future rate hikes was probably too aggressive and opening to slowing the rate of hikes", Oliver Pursche, vice chairman and chief market strategist at Bruderman Asset Management, told Reuters. Those trends, he said, were coinciding with inflation remaining "right on target" at the Fed's goal of 2 per cent annual price increases.

In the past, Powell has mentioned a number of looming risks to the economy, including the slowdown in global growth and the fading benefits of the tax cuts and government spending boost that took effect this year as well as the cumulative effect of the Fed's own rate hikes. The president argued that the Fed is hurting the USA economy by raising interest rates.

If Federal Reserve Chairman Jerome Powell meant to walk back a misstatement from last month, he may not have meant to walk it quite this far.

"Powell will be reluctant to provide any sort of thing like that, as his prerogative has been optionality", Goldberg said. "However, several dealers noted that they perceived recent communication regarding the neutral policy rate and its role in informing monetary policy as being unclear or at times inconsistent with prior Fed communication", the survey said in the comments section. "We still expect the Fed to hike rates twice in the first half of next year, before a slowdown in economic growth to below potential forces it to the side lines", Paul Ashworth, chief USA economist at Capital Economics, wrote in a note. Bloomberg Economics anticipates three increases. Some analysts are now saying the Fed may decide to raise rates only once or twice in 2019.

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