Don't expect big interest rate hikes, Fed chief Powell says

Don't expect big interest rate hikes, Fed chief Powell says

The positive sentiment surrounding GBPUSD pair was further boosted by dovish comments made by Fed Chair Jerome Powell yesterday when he said that USA interest rates were just below neutral which was in stark contrast to hawkish comments made by both Fed bigwigs and Powell himself in his previous Fed rate hike related speeches and investors have interpreted the latest comment as signal that rate hike cycle was nearing its end which caused US Treasury Yields to go lower and also saw US Greenback lose ground significantly across major risky assets in all key global markets. Many economists also worry about potential economic damage caused by President Donald Trump's trade conflicts with China and other nations.

"So far, I'm not even a little bit happy with my selection of Jay", Trump told the Post. "Not even a little bit". "And I'm not blaming anybody, but I'm just telling you I think that the Fed is way off-base with what they're doing", he added.

But the odds of a 0.25-point rise in March have fallen to 34% from 50% according to FactSet.

On Wednesday, Steve Keen, the author of "Debunking Economics" and the world's first crowdfunded economist, joined Radio Sputnik's Loud & Clear to discuss the the Federal Reserve's interest rate hikes.

Those decisions have drawn rebukes from Trump, who wants the Fed to focus on economic growth. "It's so tight. I think the Fed has gone insane", Trump told reporters in Erie, Pennsylvania, where he had come for a campaign rally earlier this month.

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There was little reaction to United States economic data released during the session, including the second reading of Q3 GDP which rose at a seasonally-adjusted annual rate of 3.5%, unchanged form the initial estimate.

In an interview Tuesday with the Washington Post, the president complained bluntly and at length about Powell, who was Trump's hand-picked choice to lead the Fed. Those increases have raised its benchmark rate to a still-historically-low range of 2 per cent to 2.25 per cent.

"If I were on the [Federal Open Market Committee], I would not raise rates at their upcoming meeting in December", said Josh Bivens, research director of the left-leaning Economic Policy Institute, referring to the Fed panel that sets interest rates. That contrasted with a remark Powell made in October that the Fed's policy rate was still well below neutral. I'm not going to say it's so much Trump ー that Trump has been sending mean tweets about Chairman Powell. But the likely pace of rate increases next year remains a subject of speculation.

The Bank of England warned on Wednesday that Britain risked a bigger hit to its economy than it suffered from the global financial crisis a decade ago if it leaves the European Union in a "disorderly" manner, which would include a 25 per cent crash in the value of the pound. The higher the interest rate, the greater the cost to pay off credit.

Meanwhile, the dollar retreated with potentially fewer rate increases on the horizon, and sterling rose after the Bank of England said the British economy could shrink by as much as 8 percent in about a year after a no-deal Brexit. Instead they will watch economic data, especially inflation.

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