Powell: Fed 'Waiting and Watching' With Patience on Rates

Powell: Fed 'Waiting and Watching' With Patience on Rates

"If we have an extended shutdown, I do think that would show up in the data pretty clearly", Powell stated. He said he didn't know the exact level.

The US Dollar continues to be weighed down by the growing market conviction that the US central bank might slow the pace, or perhaps even pause the rate hike cycle in 2019, reinforced by the Fed Chair Jerome Powell's comments on Thursday.

"Especially with inflation low and under control we have the ability to be patient and watch patiently and carefully as we. figure out which of these two narratives is going to be the story of 2019", Powell said when asked at the Economic Club of Washington about December forecasts from Fed policymakers showing they expect a median of two more rate hikes in 2019, after four previous year.

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 Fed's communications - and a Bloomberg News report that President Donald Trump had discussed firing Powell - helping bring on the worst December for stocks since the Great Depression.

Powell said last week that he's "listening sensitively to the message that markets are sending" about downside risks.

"There's good momentum going into this year", Powell said during an interview at The Economic Club of Washington DC.

"Growth prospects in other economies around the world have moderated somewhat in recent months, and overall financial conditions have tightened materially, " he said in the text of a speech late on Thursday in NY.

The monthly reductions, effectively running on autopilot, have been criticized by some as a steady tightening of financial conditions the Fed should reconsider. "The principal worry we have is global growth" in Asia, Europe and elsewhere.

However, the Fed chief is less bullish on the world economy.

The FTSE 100 is on track for its best week in three months after global stocks were lifted by reassurances from the US Federal Reserve that it could be patient about interest rate rises.

Powell and others have been less demonstrative and noted that economic data remains strong, particularly after a recent payroll report that showed more than 300,000 jobs added in December.

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

He agreed with the prevailing view of the U.S. 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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