Feds Bullard warns of recession risk in raising rates

27 August, 2018, 11:12 | Author: Lora Ball
  • Powell noted that the economy remained strong and anyone who wanted a job could find one

Powell adds that while annual inflation has risen to near the Fed's 2 percent target rate, it doesn't seem likely to accelerate above that point.

Amid the grandeur of the Grant Teton Mountains, Powell will be the lead-off speaker at the conference, which has been sponsored for more than three decades by the Federal Reserve Bank of Kansas City.

Delivering an address at the Fed's yearly confab in Jackson Hole, Wyoming, Fed chairman Jerome Powell said he anticipates that the current path of gradually rising interest rates will continue.

Speaking at the annual gathering of global central bankers in Jackson Hole, Wyoming, Powell said the USA economy remained strong and anyone who wanted a job could find one. As the Fed comes closer to ending its rate hikes, and the other central banks start to raise rates especially the European Central Bank, the dollar will eventually weaken.

"The implication is that the Fed won't be seeking to pre-emptively hike rates and the outlook for 2019 hikes now becomes more complicated".

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He said prices were rising at about the Fed's target pace of two percent, signaling the United States central bank does not expect to accelerate interest rate increases as some investors have feared.

U.S. Federal Reserve Chairman Jerome Powell said on August 24 that the economy is strong and there was no clear sign of inflation moving above the central bank's 2 percent target.

Some analysts said Powell's speech suggested the central bank may be approaching its neutral federal funds rate, which means the federal funds rate has reached an equilibrium where it neither stimulates nor suppresses economic growth.

The chairman's measured tone about the economy and his message that the Fed plans to stick with a gradual pace of rate hikes appeared to meet approval with investors. He further added the US central bank should do more to help him to boost the economy. The president has complained that the Fed's tightening of credit could threaten the continued strong growth he aims to achieve through the tax cuts enacted late past year, a pullback of regulations and a rewriting of trade deals to better serve the United States. "I'm not thrilled", Trump said in an interview with Reuters. Trump was once again scolded by the press for criticizing the Fed a second time.

But, as he did with rate increases, he signaled that Fed officials would do what they think is right for the economy regardless of political pressure. Most Fed watchers foresee two more hikes this year - next month and then in December. Under the Fed's rotating voting system for Fed regional bank presidents Bullard does not have a vote this year, but he participates in rate-setting discussions.

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