Powell repeats pledge to remain 'patient' with rate hikes

Powell repeats pledge to remain 'patient' with rate hikes

Powell is scheduled to speak again on Thursday before the Economic Club of Washington in remarks that will be closely watched for further clues about the Fed's current thinking.

"Similarly, Trump also softened his stance on China after sharp falls in stock prices".

During an interview at The Economic Club of Washington, D.C., Powell said that continued shutdown stopped some of the data feed that the Fed needed, making the outlook of US economy less clear, thus complicating policy-making.

Starting after the January 30 announcement, Powell will hold a press conference after every meeting, rather than just four times a year, giving him many more opportunities to try to communicate with financial markets.

The S&P gained 3.43 percent, and the yield on the 10-year Treasury note rose 11 basis points. Traders were already wary of statements Powell made in December about rate hikes.

St. Louis Federal Reserve Bank President James Bullard speaks at a public lecture in Singapore, Oct. 8, 2018.

"If we have an extended shutdown, I do think that would show up in the data pretty clearly", Powell stated.

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The central bank's vice chairman, Richard Clarida, said later on Thursday that if the global slowdown and tightening of financial markets persists, the Fed would take policy steps to offset that.

The Fed chief was also asked about the partial US government shutdown.

Powell had roiled markets in early October when he indicated several more rate increases were likely and since then he and other senior officials have come out multiple times with more soothing comments. Big picture: "they don't have that much further to go and they don't have to go there fast", said Robert Tipp, chief investment strategist with PGIM Fixed Income in Newark, New Jersey.

As the monetary policy making agency in the United States, Fed recently switched to a more dovish tone for its path of interest rate hikes.

"This drop in the dollar is an overdue correction following a surprisingly robust few weeks despite the massive collapse in USA rate expectations", said Ulrich Leuchtmann, a currency strategist at Commerzbank.

Eric Rosengren, president of the Boston Federal Reserve Bank, one of 12 in the Fed system, said financial markets had become "unduly pessimistic" about the economic outlook but like others he agreed policymakers should heed their warning. "But what I do know is that we will be prepared to adjust policy quickly and flexibly and to use all of our tools to support the economy should that be appropriate to keep the expansion on track, to keep the labor market strong and to keep inflation near 2 percent".

He agreed with the prevailing view of the USA economy slowing to around 2.25-2.5 per cent this year, with unemployment holding around the current 3.9 per cent.

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