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profishingrods.com January 24, 2019


Wall St rallies for 5th day after Fed chair Jerome Powell’s comments

11 January 2019, 02:24 | Joann Bryant

Bullard Warns of a U.S. Recession If Fed Keeps Raising RatesMore

Bullard Warns of a U.S. Recession If Fed Keeps Raising RatesMore

"We are in a place where we can be patient and flexible and see what does evolve", Powell said.

The head of the Federal Reserve also warned that while his department has no official projection on the current government shutdown, it can still have a damaging effect on the national economy.

The balance sheet "will be substantially smaller than it is now", though bigger than it was before the crisis, Powell said.

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

"There are some who seem determined to talk us into a downturn", Thomas J. Donohue, president of the US Chamber, said in a speech Thursday. He said he didn't know the exact level.

Clarida repeated Powell's assertion earlier in the day that monetary policy was not on a preset course.




Clarida is the latest US central banker to refine the Fed's monetary message after the hawkish tone of their December 19 statement and forecasts for further rate hikes in 2019 roiled financial markets. Powell and several other Fed officials have recently begun stressing the idea that the Fed can afford to be "patient" when it comes to raising rates because inflation is so low. Markets have expressed concerns that the Fed's operations to reduce the balance sheet could be depressing the markets and ultimately slow growth.

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. Rubenstein also hosts an interview show on Bloomberg Television.

While he has near weekly meetings with Treasury Secretary Steven Mnuchin, Powell said he has not met with Trump since taking over as Fed chairman, nor does he have any meetings with the president scheduled.

The Fed's favorite inflation gauge, the personal consumption expenditures price index, clocked in at a 1.8 percent year-over-year rate in November. The unemployment rate stands at 3.9 per cent and central bankers expect it to average 3.5 per cent in the final three months of this year.

After four rate hikes past year, the Fed would be "bordering on going too far and possibly tipping the economy into recession" if rates go higher, Bullard said, adding that he would be willing to cut interest rates if needed. Financial markets are incorporating a variety of risks to the outlook, ranging from slowing global growth to the potential for a protracted trade war with China.



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