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Fed Chairman Jerome Powell opened the door for a possible reversal of rising interest rates for 2019, after interest rate increases in December were almost certain.
Powell, in his speech on Wednesday, noted changes in tone statements last month. The Fed, he said, has reduced its series of monetary policies to a level "just below", neutral (neither the interest rate nor the growing rate of the economy), and has added that the economy had not yet fully experienced the effect of rising interest rates.
Powell's comments led to a sharp rise in the recently challenged stock market and coincided with a period during which President Donald Trump repeatedly criticized the Fed's rate hikes.
"Politicians were expecting a rise of three interest rates next year, according to the median predicted by Fed officials, announced in September, with the chart described in September," said Lou Crandall, chief economist of Wrightson ICAP LLC. .
The Standard & Poor's 500 (S & P 500) indices, with traders' expectations of raising interest rates with the biggest rise since March, while interest rates on US Treasury bonds at two years fell by 2 basis points. In 2019, the rise in forward rates in 2019 was 25 basis points, which corresponds to a rise in interest rates. Coins from commodity producers and developing countries pioneered emerging currencies against the dollar as traders thought the dollar could approach the top.
If the Fed raises the interest rate by 25 basis points as expected, the benchmark interest rate will rise to 2.25-2.5%. This move will bring interest rates closer to the bottom of the neutral interest rate estimates of the 15 governors and regional chiefs of the Fed. According to Fed officials, the neutral interest range was between 2.5 and 3.5%.
Powell, on the other hand, has shown that growth would be strong, that unemployment would remain low and that inflation should remain close to the 2% target set by the Fed, indicating positive expectations for the future. ;economy. In his New York Economic Club address, Powell said, "There are many reasons to be satisfied with this prospect."
Powell, however, warned that the situation could reverse the expectations of the Fed and "a predefined political path," he said.
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