Powell hints at slower rate-hike pace

Rupee Climbs Past 70/Dollar Hits 3 Month High

Rupee Climbs Past 70/Dollar Hits 3 Month High

There's been suggestions from some market observers that Jerome Powell's comments were misinterpreted yesterday.

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", said Oliver Pursche, vice chairman and chief market strategist at Bruderman Asset Management in NY. But some economists say three rate increases for next year are beginning to look less certain.

He told an audience in NY on Wednesday, "Interest rates are still low by historical standards, and they remain just below the broad range of estimates of the level that would be neutral for the economy".

And on Wednesday evening, just as Mr Carney was being questioned about the stability report, Mr Powell appeared to be delicately walking away from a gun the U.S. president had pointed at his head.

During the Obama administration, the federal interest rate was dropped to zero for a long period of time, but Powell began to hike the rate back toward where it was in the early 2000s. "All he is doing is pointing out an obvious idea", Porcelli wrote in a client note. Salesforce.com surged 10.3 per cent.

He said then that growth overseas was likely to weaken and that U.S. fiscal stimulus, which had goosed consumption, would soon fade.

"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". "While FOMC participants' projections are based on our best assessments of the outlook, there is no preset policy path", Powell said, referring to the central bank's Federal Open Market Committee, which sets interest rates.

Mr. Powell's October remark came during an unscripted moment at a moderated discussion in Washington.

The Fed has settled into a quarterly rate-hike cycle and is still expected to raise rates again next month, in what would be the fourth hike this year.

"The neutral rate is an absurd concept".

The hikes have prompted a flood of criticism from President Donald Trump, who has repeatedly attacked the Fed and Powell personally. That comment had unsettled investors who feared that it meant the Fed would need a number of further hikes to get to neutral. "Large sustained declines in equity prices can put downward pressure on spending and on confidence". But many economists warn that the attacks actually could pressure the central bank to raise rates to demonstrate its independence from political influence.

But the report highlighted stock prices that are high by some measures, commercial real estate values "growing faster than rents" and the willingness of lenders to fund risky corporate loans. If the Fed is deterred from keeping rates too low for too long, the likely upshot will be a burst of inflation and interest rates that have to be raised aggressively later on to combat it, jeopardising growth and risking higher unemployment.

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