Fed Chief's Remarks On Economy And Interest Rates Cheer Investors

Fed Some US businesses' debt at highest level in 2 decades

"I'm doing deals, and I'm not being accommodated by the Fed", Trump said.

He said: "We will be paying very close attention to what incoming economic and financial data are telling us". The benchmark fed funds rate, at 2.00-2.25 percent, is within a quarter of a percentage point of the bottom of the Fed's estimated range for neutral, but is also several quarter-point rate hikes below the mid-point estimate of 3 percent.

"He said the magic words", Gregori Volokhine of Meeschaert Financial Services told AFP.

James Bianco, president and strategist at Bianco Research, said Powell's change in tune has less to do with the president and more with the state of the stock markets, which endured a rough October and have continued their decline this month. The markets interpreted this as a signal that the Fed is near the finish line in its rate hikes; the USA dollar and bond yields declined accordingly. Investors felt at that time that a series of aggressive rate hikes might put a halt to the strong economic growth of the past two years.

Federal Reserve Chair Jerome Powell on Wednesday appeared to signal the USA central bank is nearing an end to its interest-rate hikes, saying the Fed's policy rate is now "just below" a level that neither brakes nor boosts a healthy economy.

Stocks surged on Wall Street Wednesday, powering a 600-point gain in the Dow Jones Industrial Average, after the head of the Federal Reserve hinted at slower interest rate increases.

In his eagerly awaited and much-ballyhooed speech to the Economic Club of New York Wednesday, Fed Chairman Jerome Powell said interest rates were "just below" the so-called neutral level, that elusive number that neither stimulates nor retards the economy.

"As always, our decisions on monetary policy will be created to keep the economy on track", he said.

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But in response to questions he likened the policy process to walking through a dark room, forcing officials to slow down. You'll have traded them for something much, much worse: A shock wave of uncertainty and instability big enough to trigger a global recession.

However, market analyst Daniel Geltrude said that Powell's statement Wednesday that interest rates are "just under" where they need to be for a "neutral" impact on the economy is a "180" that Trump may have caused.

However, many economists expect that pace to slow next year as the effects of the stimulus fade.

Powell also commented on the Fed's Financial Stability Report, which assesses the risks in the banking system and the strength of the consumer balance sheet.

USA stock markets moved sharply higher on the news.

It said Britain risks suffering an even bigger hit to its economy than during the global financial crisis 10 years ago if it leaves the European Union in a worst-case Brexit scenario.

Powell in a recent public appearance said policymakers had suffered "a failure of imagination" back then regarding how central financial stability was to the economy overall.

While he acknowledged the growing concern over increased borrowing by businesses that already carried a high debt load, he said for now they were "unlikely to pose a threat to the safety and soundness" of the system in the event of a downturn.

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