Powell: US economy and banks seem sturdy but face some risks

Powell: US economy and banks seem sturdy but face some risks

"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.

A few participants also expressed reservations about the timing of the next rate hike, suggesting that the benchmark rate - which determines the cost of borrowing on credit cards, mortgages and other loans - may now "be near its neutral level" and "further increases" could slow down the economy's expansion.

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", Oliver Pursche, chief market strategist at Bruderman Asset Management in NY, told Reuters. From the Fed's perspective, the interest rate hike in December will probably lead to an interest rate level that will no longer justify the automatism of a quarterly interest rate hike.

Powell has tried to delicately explain how the Fed is weighing future policy moves by using the analogy of walking into a pitch-black room filled with furniture.

The US central bank chairman has repeatedly tried to advise investors not to read too deeply into the Fed's economic forecasts, saying policymakers often don't have the ability to see that far into the future and decisions are formed based on incoming data from markets, the economy and business contacts.

Throughout October and into this month, partly in response to Powell's October 2 remarks and concerns over the impact of the trade war with China, the stock market experienced significant falls.

Here's the key line from Powell investors latched onto: "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--that is, neither speeding up nor slowing down growth".

The neutral rate can seem like a central bankers' Holy Grail: The "Goldilocks" setting for monetary policy, neither so low as to allow excess inflation nor so high as to weigh on the economy.

Google May Be Shutting Down Hangouts For Consumers Sometime In 2020
While consumers may lose the well-known chat app, Hangouts will live on for enterprise users as Hangouts Chat and Hangouts Meet . Google has indicated for years now that it planned to position Hangouts as a competitor to workplace chat apps like Slack.

"I'm not dancing or partying right at the moment", he said, adding that the Fed has talked about gradual rate hikes "for a very long time".

Next month's expected quarter-point increase would lift the central bank's target for the federal funds rate to a range of 2.25 per cent to 2.5 per cent.

Mr Powell's comments appear to implicitly reject arguments from President Trump that past interest rate rises have been a mistake. "We have to be thinking about how much further to raise rates and the pace at which we will raise rates".

The rate hike likely coming on December 19 would raise the benchmark lending rate, which influences borrowing costs throughout the wider economy, to 2.5 per cent. That would bring it to about the bottom of the September range of neutral-rate estimates from 15 governors and regional Fed presidents, who gave figures from 2.5 per cent to 3.5 per cent.

"Many baby boomers like me are, however, reaching an age where a good report is, 'Well, there are a number of things we should keep an eye on, but all things considered you are in good health, '" said Powell.

His comments sparked a surge in a stock market that had struggled of late and came in the wake of criticism of the Fed's rate increases by President Donald Trump.

Powell noted the word "bubble" wasn't mentioned in the report, though he said some asset prices, such as corporate debt, were high relative to the past.

Related Articles

  • Putin greets Saudi crown prince with high-five at G20 summit

    Putin greets Saudi crown prince with high-five at G20 summit

    Launched in April 2016 by the crown prince , the Vision 2030 aims to diversify Saudi Arabia's economy beyond the energy sector. Argentina's President Mauricio Macri said that his country will discuss some investment ideas with Saudi Arabia.
    Managed Blockchain Service Introduced By Amazon Web Services

    Managed Blockchain Service Introduced By Amazon Web Services

    The solution allows one entity to own the ledger, but allow other organizations to access the data on it. The service can be applied in Finance, Manufacturing, Insurance, HR & Payroll and Retail & Supply Chain.
    Cameroon stripped of 2019 Afcon hosting rights

    Cameroon stripped of 2019 Afcon hosting rights

    Local and worldwide news outlets have repeatedly speculated this year that Morocco might replace Cameroon . He was speaking after a 10-hour CAF executive meeting held behind closed doors in the Ghanaian capital.
  • DR Congo Ebola outbreak second largest in history

    DR Congo Ebola outbreak second largest in history

    There are also concerns regarding the high number of young children affected with the virus, according to the WHO. A world-first drug trial for Ebola has begun in the Democratic Republic of the Congo amid a killer outbreak.
    EU’s Tusk: No deal or no Brexit’ if Britain’s MPs reject agreement

    EU’s Tusk: No deal or no Brexit’ if Britain’s MPs reject agreement

    He added: "I think that the reactions to some of the Treasury analysis have been completely overblown". And they will vote to reject her Brexit deal confident they are right about that.
    New cases of HIV rise in Eastern Europe, decline in the West

    New cases of HIV rise in Eastern Europe, decline in the West

    But methadone, which research has shown helps to prevent injecting drug users passing on HIV, is banned in Russian Federation . Eastern Europe and Central Asia is one of only two regions where overall HIV prevalence has not declined in recent years.
  • NASA selects nine US companies to vie for moon program funding

    NASA selects nine US companies to vie for moon program funding

    If you've been paying attention to the NASA news, you'll have noticed that the last week has been pretty busy for the company. Bridenstine said he has spoken with Musk recently that he does not want NASA contractors engaging in questionable behaviour.
    America first? Mexico, Canada push back on name of new trade deal

    America first? Mexico, Canada push back on name of new trade deal

    The signing ceremony at a packed hotel in Buenos Aires on the sidelines of the G20 summit did not come without a fight. Kushner also celebrated what he called "a historic moment" in the relationship between the United States and Mexico.
    G20 summit opens as leaders give Saudi prince mixed reception

    G20 summit opens as leaders give Saudi prince mixed reception

    A White House spokeswoman denied this and Trump said on Friday the ships' seizure was the "sole reason" he scratched the meeting. There are also questions about how to handle the awkward presence of Crown Prince Mohammed bin Salman.
  • New Jersey Man Charged With Killing Brother, Family In Colts Neck

    New Jersey Man Charged With Killing Brother, Family In Colts Neck

    Police discovered the bodies of Caneiro's wife and two children in their New Jersey mansion, according to The New York Times . He has also been charged with possession of a firearm and possession of a weapon for an unlawful goal , as well as arson .
    What's your status? Ten facts to mark the 30th World AIDS Day

    What's your status? Ten facts to mark the 30th World AIDS Day

    Notable progress has been made in the AIDS response since 1988, and today three in four people living with HIV know their status. A British MP has become the first sitting member to disclose he is HIV positive to the United Kingdom parliament.
    US Migrant Caravan: Tijuana officials brace more incoming migrants

    US Migrant Caravan: Tijuana officials brace more incoming migrants

    Department of Homeland Secretary Kirstjen Nielsen said this week that there are 8,500 spread across Tijuana and nearby Mexicali. That prompted Border Patrol agents to launch tear gas and pepper spray balls to quell the unrest.