Powell hints at slower rate-hike pace

Powell defends Fed charge hikes amid Trump onslaught			 0					By		Marta Subat

Nearly all Federal Reserve officials at their last meeting agreed another interest rate increase was "likely to be warranted fairly soon", but also opened debate on when to pause further hikes and how to relay those plans to the public.

"Powell took pains to state that the FOMC's rate projections are based on their best assessments of the economic outlook", Kevin Logan, chief U.S. economist for HSBC wrote in a Wednesday note to clients, referring to the policy-setting Federal Open Market Committee.

Until now, strong economic data and new fiscal stimulus made the central bank more determined to gradually lift rates to neutral because the economy is expanding solidly and unemployment continues to fall.

After lift-off in December 2015 followed by a rise a year later, the central bank has since steadily raised benchmark rates and is widely expected to do so again in December.

"The unemployment rate is 3.7 percent-a 49 year low, and many other measures of labor market strength are at or near historic bests", he said.

The Fed takes equally seriously the risks of hiking too quickly and shortening the economic expansion, and on the other hand of hiking too slowly and prompting higher inflation or financial instability, Powell said.

That sparked fears that rates could go higher than expected and many investors cite those remarks as the reason for the stock market sell-off in October and November. And neither should investor expectations about the Fed's future work.

Just on Tuesday, Fed Vice Chair Richard Clarida, in a speech to numerous same economists and investors in NY, used precisely the same language to describe the policy rate as "just below" the range for neutral.

More news: Cindy Hyde-Smith wins MS senate seat in special election

It was a "rookie mistake, " Omair Sharif, senior USA economist at Societe Generale, said Wednesday in a note to clients.

Traders believe the risk of fast-rising interest rates hurting the USA economy and the stock market is now on the downside after Powell said monetary policy rate is now "just below" estimates of a level that neither brakes nor boosts a healthy economy.

US President Donald Trump has repeatedly slammed the Fed chair for raising rates too often.

It is not clear whether the idea of perhaps nudging rates above neutral, as he had earlier suggested, is still on the table, or if it means he expects fewer rate hikes, or even a pause. The minutes showed a couple of participants felt the benchmark fed funds rate "might now be near its neutral level and that further increases in the federal funds rate could unduly slow the expansion of economic activity".

Minutes released yesterday from the Fed's last policy meeting also showed some policymakers believed going above neutral could slow the economy needlessly.

"What do you do?" said Powell in NY. "As you get closer you tack a little bit more". He kept up his criticisms with Powell on Tuesday, saying rising interest rates have hurt the economy. Bloomberg Economics anticipates three increases.

In November, Fed policymakers agreed to hold rates steady, leaving the benchmark rate unchanged in a range of 2% and 2.5%. Currently, the fed funds futures are pricing in an 83 percent chance of a December hike and one more in 2019.

"There is a great deal to like about this outlook", said Powell on Wednesday.

Related News:



Most liked

Major League Baseball donated to Hyde-Smith's campaign as favor to McConnell
Hyde-Smith's campaign hammered Espy for his $750,000 lobbying contract in 2011 with the Cocoa and Coffee Board of the Ivory Coast. That would give them a 53-47 seat advantage, still slim in a chamber where it often takes 60 votes to advance legislation.

Spurs Boss Mauricio Pochettino Makes Bold Claim Ahead Of Barcelona Clash
But of course it will be so hard and we need to focus now on Sunday - another derby against Arsenal . But one thing we have is belief and faith that we can win.

Trump sends mixed messages on tariff negotiations with China
Representatives of other nations and global organizations, as well as accompanying officials, will not take part in the meeting. As the leaders arrived, Argentine security forces began locking down the central business district in Buenos Aires on Thursday.

First Lady in Virginia for opioid town hall discussion at Liberty University
Vice said that " Melania Trump's Christmas from Hell" pays "tribute to our country's unique heritage of anguish and pain". Her words were greeted with laughter, cheers and applause from the audience.

Kartarpur corridor opening is huge success for Pakistan: FO
There can't be peace between Pakistan and India if the Pakistan government and army are on the same page, Amit Shah said today. We have found Kashmiri terrorists in Punjab. "If we get more hugs from Sidhu, many of our problems will be solved", he said.

Chelsea boss Maurizio Sarri: 'I quizzed each player on Tottenham Hotspur defeat'
Hazard was likely to be rested anyway on Thursday, but given his recent recovery from a back problem, the Blues will not risk him. Eden Hazard will be missing for Chelsea when they welcome PAOK in the Europa League as they look to clinch top spot in Group L.

Nancy Pelosi's Democratic Opponents Are Backing Down | KCBS 740AM | 106.9 FM
Pelosi is also working to mollify a less vocal group of critics who could nonetheless cause problems for her on the floor. Higgins ended up endorsing Pelosi after she vowed to support health care and infrastructure proposals that he champions.

New Sinclair Segment Defends Tear-Gassing Of Migrant Children At Border
Migrants gather at the Mexico-US border after getting past a line of Mexican police at the Chaparral crossing in Tijuana, Mexico . A migrant mother who was trying to illegally enter the United States while scaling a border fence fell off and was impaled.

Xbox One X Sale: Just $399 for Cyber Monday (Lowest Price)
Overall your savings buying a Nintendo Switch console in the GameStop Cyber Monday 2018 sale is $85. Nintendo sold over $250 million in 3DS and Switch products over the five-day Thanksgiving holiday.

Red Dead Online Goes Live This Week
For the players who didn't buy the Ultimate Edition you'll have a little bit longer to wait until you can hop into the beta. Players can form a posse with up to seven players online to roam the wilderness in search of treasure or fight rival gangs.

475 people still unaccounted for as Camp Fire is almost contained
The Camp Fire has burned through more than 153,000 acres, a charred swath of land larger than Chicago. It caused mass destruction and death in the Butte County communities of Paradise, Concow and Magalia.

LSU-Texas A&M 7-Overtime Thriller Ends with Postgame Fight
Fisher was asked who the second person was and if he knew about the incident after the game and said: "I have no idea". Kragthorpe, who is a team special assistant, was checked out after the punch and is reportedly okay.

Taiwanese reject legalizing same-sex marriage in referendum
But on Saturday, Taiwanese voters firmly rejected same-sex marriage in a series of referendums . Ten referendums were also held.

Oprah Winfrey’s mom dies at 83
Oprah's father, Vernon Lee, reportedly only had one encounter with Lee before she gave birth to their daughter. This image released by Harpo Inc. shows media mogul Oprah Winfrey , right, with her mother Vermita Lee.

LeBron cites turnovers as culprit in Lakers' latest loss to Magic
Meanwhile, the Lakers got enough offensive firepower from James and Ingram combining for 29 of the 52 points in the second half. But as Lakers coach Luke Walton aptly pointed out, focusing on the misses by James and Caldwell-Pope kind of misses the point.