US Fed official urges pause on rate hikes with inflation under control

Was Post Fed Chair Speech Rally a Market Overreaction

The minutes showed a couple of participants felt the benchmark fed funds rate "might now be near its neutral level and that further increases in the federal funds rate could unduly slow the expansion of economic activity". Investors interpreted his remarks as evidence that the Fed might consider pulling back from quarterly rate hikes.

The Fed said that nearly all of its policymakers agreed that "a gradual approach to policy normalization remained appropriate" in its newly released minutes of the Federal Open Market Committee (FOMC) meeting which was held from November 7 to November 8.

A December increase would bring the policy rate close to the bottom of the 2.5% to 3.5% range policy makers estimated as neutral.

The central bank expects the unemployment rate to remain historically low next year.

Tim Duy, a veteran Fed watcher and professor of economics at the University of OR, believed that the Fed remains likely to hike in December, but there's a lot of uncertainty about the pace of rate hikes next year.

Market reaction reflected investors' fears the Fed might end up making the kind of mistake Powell talked about - tightening policy too much because of a false read on where neutral is, at a time when clouds had begun to form on the economic horizon.

Speaking at the Economic Club of NY on November 28, Jerome Powell outlined the Fed's decision to slow or pause interest rate movements in 2019 and would continue to monitor the nation's financial stability.

Investors welcomed his remarks because they appeared to retreat from a comment he made in early October describing the Fed's benchmark rate as a "long way" from a neutral level - which implied to some listeners that Mr. Powell planned to keep raising rates for a while.

The minutes from the rate-setting Federal Open Market Committee's November 7-8 meeting showed a rising level of uncertainty in the central bank about the near future. Powell, who took over as Fed chairman in February, has said he wants to provide the public with "plain English" descriptions of what the central bank is up to.

USMCA: Trump Signs New Trade Agreement With Mexico And Canada
There is no formal meeting between Trump and Trudeau on either leader's schedule for the Friday and Saturday summit. The three countries continued to talk out the agreement all the way up to the signing ceremony.

Israel carries out airstrikes in Syria
The Israeli army did not claim responsibility for the bombardment and declined to comment on the report. However, speaking to Reuters, an Israeli military spokesman rejected the RIA report as "bogus".

Baker Mayfield: I speak my mind, that’s how I am
Mayfield acknowledged that the " fake " comment was directed at Jackson, but didn't explain why. " We've moved on ", he said. Mayfield also said there were things that happened behind the scenes with Jackson in Cleveland that people don't know about.

"If you look down the road, you see challenges ahead, and they're challenges that are typical in a cycle", said Powell speaking earlier this month at the Federal Reserve Bank of Dallas.

"If there has been one certainty of late it is the market's ability to misinterpret Fed Chairman Powell".

"What do you do?" said Powell in NY.

"Participants also commented on how the Committee's communications in its post-meeting statement might need to be revised at coming meetings, particularly the language referring to the Committee's expectations for "further gradual increases" in the target range for the federal funds rate", the minutes said.

The speech was "a reassuring message from a market perspective because it removes concerns of a Fed dead set on tightening up to a point where rates would intentionally slow down the economy", he added.

"We know that things often turn out to be quite different from even the most careful forecasts", Powell said at an Economic Club of NY luncheon on Wednesday.

The Fed raised its benchmark rate in March, June and in September, with the last increase putting it in a range of 2 per cent to 2.25 per cent.

Although a December rate hike has been widely expected, the Fed's path next year has been more uncertain, with investors last month expecting even three rate hikes in 2019.

Related:

Comments

Latest news

Liverpool manager Jurgen Klopp hits out at 'bulls***' criticism
He told the Daily Star : " Liverpool were given the runaround by Paris Saint-Germain but they will win the Merseyside derby". Everton manager Marco Silva has no new injury worries ahead of his first Merseyside derby.

CAF withdraws AFCON 2019 hosting rights from Cameroon
Aside delays as per reports of inspection teams within the last 18 months, security in the country is said to be at high risk. Caf president Ahmad Ahmad says it will work to "determine a new organising country by the end of the year".

Video shows fight at Cleveland hotel involving Chiefs running back Kareem Hunt
Hunt was questioned by police at the time of the incident , but was not arrested, and the event was reported by media at the time. Hunt then turns around the corner storms into a man who collides with the woman, sending both to the floor.

Saudi crown prince, Putin 'bro-five' at G20 summit
The Saudi Gazette newspaper posted a video of the meeting online showing the two speaking in hushed tones with their heads close together.

AWS announces 13 new machine learning services and capabilities
During the 12 months to the end of September, NAB migrated 3 per cent of its applications to cloud services. Once trained on a subset of the data, it may be used to apply labels automatically.

Winning South African rugby player Naka Drotske shot in robbery
The 47-year-old Drotske then charged at them to push them out and was shot in a struggle on the verandah outside, he said. Spokesperson for SA Rugby De Jongh Borchardt says that the union wishes Drotske a speedy recovery.

Fed officials express caution about pace of future hikes
Powell also revealed the economic growth coincides with inflation, and the Fed's annual goal of 2 percent interest rate increases. That comment had unsettled investors who feared that it meant the Fed would need a number of further hikes to get to neutral.

Oil prices reverse course as Russian Federation leans toward output cut
On Wednesday, Putin said Russian Federation was in touch with OPEC but Moscow would be satisfied with an oil price of $60 a barrel.

Tsunami warning for Alaska after 6.6-magnitude quake
Harper said the quake was "significant enough that the people who were outside were actively hugging each other". A magnitude 7.0 natural disaster struck near the southern Alaska city of Anchorage on Friday.

Justin Trudeau Refuses to Say 'USMCA' at Signing Ceremony
Mexico has also agreed to labor reforms, while Canada agreed to increase market access for US "dairy products, eggs, and poultry". He struck a more optimistic note on Friday, saying, "It's been so well-reviewed, I don't expect to have very much of a problem".

Facebook once considered selling user data, internal emails reveal
Nearly all the documents that were filed in the case have been taped up by a California judge, which was a request by Facebook . Internal Facebook documents which are seized by British lawmakers say that Facebook once did think of selling users data.

Ukraine Bans Entry To Russian Men, Says Official
All Russian men of combat age were barred from entering Ukraine today as tensions continued to rise between the two countries. Poroshenko responded by ordering martial law in much of the country, a move that went into effect with parliamentary approval.

Doctors Swallow Lego Heads for the Good of Mankind
The primary goal of the research was to see how long it takes for a tiny toy like a Lego to find its way through the human body. It took an average of 1.71 days for the Lego head to exit the body, with a varied FART score between 1.14 and 3.04 days.

G20 Summit: All you need to know
As part of the discussions over the past year, the USA has given Chinese officials a list of 142 demands it wants addressed. The summit will gather leaders of the world's major developed and emerging economies for discussions on global governance.

Now 'Daredevil' has been cancelled on Netflix too
There also have been creative issues, with a revolving door of showrunners on Marvel's Netflix shows. Earlier this year, " Iron Fist " was the first to fall, followed shortly afterward by " Luke Cage ".

Other news