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US Federal Reserve Chairman Jerome Powell has eased his concerns over the threat of monetary policy picking up with too tight monetary policy. The policy of rising rates was designed to balance the dangers, he said Wednesday in New York. But this is a tightrope walk: "We know that things often evolve differently from the most cautious forecasts." The current range of interest rates from 2.0 to 2.25% is "just below" the estimated neutral level, with which the economy is neither encouraged nor slowed down. This pbadage has been interpreted by some badysts as meaning that the Fed could prove itself in future interest rate hikes.
"Powell's comments suggest that there may not be as much interest rate hikes as investors have badumed," said Cresset Wealth Advisors economist Jack Ablin. , Chicago. Other badysts also pointed out that the president of the central bank had said a month and a half ago that the Fed was away from neutral interest rates: "It 's all about". a dramatic turnaround, "says economist Walter Todd of Greenwood Capital.
Due to the strength of the economy, the Fed has already raised its interest rates three times this year and has planned four further hikes by the end of 2019. The next could come in December. Wall Street investors reacted positively to the Fed's comments, as evidenced by rising prices. The euro is appreciated against the dollar.
The US Federal Reserve has been criticized for months by US President Donald Trump, who declared the Fed "crazy". He fears that the recovery fueled by his radical tax reform will be strangled by the rising price of money.
Just two weeks ago, Fed Vice President Richard Clarida said the Fed was pointing to a rate of interest that would not dampen or stimulate the economy. However, one must be cautious if the Fed wants to control the zone, considered neutral by the monetary authorities, between 2.5 and 3.5%.
Powell inspires the stock markets
Concerns about US monetary tightening and the hope of a settlement of the trade dispute between China and China fueled Wall Street on Wednesday. The Dow Jones Index of Standards closed at 2.5% at 25,366 points. The broad S & P 500 rose 2.3% to 2,743. The Nasdaq stock market index rose from just under three percent to 7,291 positions.
Before Powell's remarks, the Dow was slightly above one percent. This was corroborated by statements by US Treasury Secretary Donald Trump that his meeting with Chinese President Xi Jinping on Saturday in Buenos Aires was seen as an opportunity to "turn things around" in the trade dispute with China. . Councilor Larry Kudlow had added that until now, Trump was disappointed with China's reaction. Nevertheless, the focus has been on the optimistic aspect of the stock market statement.
In US credit markets, 10-year government bonds were virtually 100-18. They returned 3.0608 percent. The 30-year bonds yielded 16/32 to 100-17 / 32 and returned 3.3476%.
Powell's statements also rebadured investors in Japan and encouraged them to invest in stocks. The Nikkei index, worth 225, rose 0.8% to 22,356 points on Thursday. The Topix index, wider, also gained 0.8% to 1666 points.
(Reuters)
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