US Fed officials see future of rate hikes "less clear"

Sunday, 13 Jan, 2019

2 official said Thursday that low inflation should allow the central bank to be patient in contemplating future interest-rate increases, echoing comments from his colleagues in recent days.

"I'm very anxious about it", Powell told those at The Economic Club of Washington, DC, on Thursday. "We're waiting and watching".

Already-jittery U.S. stock markets temporarily shot lower on Thursday following another remark from Federal Reserve Chairman Jerome Powell. They later rallied, with the S&P 500 Index closing about 0.5 per cent higher.

"The outlook for relative central bank policy has reached its climax in terms of offering the U.S. dollar support, and widening fiscal and current account deficits are expected to deliver medium-term weakness in the currency", Mr Osborne said.

The Fed has not said what level it wants to reduce its bond holdings.

The Fed trimmed its projection of possible rate hikes in 2019 from three down to two.

The minutes made no reference to any of the attacks President Donald Trump has leveled at Powell and the Fed for the series of rate hikes, which Trump has blamed for pushing the stock market down.

"Particularly with inflation low and under control, we have the ability to be patient and see which of those two narratives is going to be the story of 2019", he said.

Speaking to an audience in Washington, Powell delivered the same reassuring message of restraint and flexibility that bolstered markets last Friday.

Powell also noted that it's a problem that the Commerce Department is mostly shuttered, which means key economic data such as retail sales and growth in gross domestic product won't be released later this month unless the government reopens.

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

"The principle worry I would have is global growth", Powell said. Rubenstein also hosts an interview show on Bloomberg Television.

The dollar's resilience can be partly explained by the fact that fears are growing about a global recession which has added to the dollar's safe haven appeal, he said.

But as recently as the December meeting, which took place before the steepest decline in stocks, Fed officials did not see their own statements and policies as the prime movers of market volatility.

Analysts read the minutes as confirmation that the central bank will likely hit the pause button at the beginning of this year to assess the impact of the rate hikes they have already delivered.

"The long-run fiscal, nonsustainability of the USA federal government isn't really something that plays into the medium term that is relevant for our policy decisions", Powell continued.