Shares lifted by Fed's patience on interest rates

Bullard Warns of a U.S. Recession If Fed Keeps Raising RatesMore

Trump has urged the Fed not to raise interest rates at all this year.

"Especially with inflation low and under control we have the ability to be patient and watch patiently and carefully as we. figure out which of these two narratives is going to be the story of 2019", Powell said when asked at the Economic Club of Washington about December forecasts from Fed policymakers showing they expect a median of two more rate hikes in 2019, after four past year.

At the same time, Fed officials don't want to give the impression they think the USA economy is vulnerable.

Federal Reserve Chairman Jerome Powell said he doesn't see a US recession in the near future, despite the rising likelihood of slowing growth elsewhere around the globe.

"Chairman Powell chose to make no news at his latest interview".

Friday's report showed shelter costs, which account for one- third of the CPI, rose 0.3 percent for a second month. Bloomberg's financial conditions index has retraced much of its December tightening.

The us Central Bank, the Federal Reserve has pressed the pause button.

Part of that message is meant to downplay the significance of the policy projections that officials issue every three months. Traders were already wary of statements Powell made in December about rate hikes.

"There is no such plan", Powell said. "That was conditional on a very strong outlook for 2019, an outlook that may still happen".

While there is wide agreement that the United States economy will grow more slowly than the roughly 3 per cent rate of 2018, there's a lot of debate about how fast the slowdown will be.

"There is no pre-set path for rates. particularly now", he said.

Powell's speech also addressed his longer-term concern about rising US debt.

Most economists say a sputtering global economy, trade disputes, higher interest rates and the fading effects of 2017 tax cuts are likely to weigh on US growth this year.

Fed officials and many forecasters expect growth to slow in 2019, but to remain strong enough to continue generating jobs and keeping the unemployment rate near its nearly 50-year low.

The S&P 500 is up over 10 per cent from a 20-month low it touched around Christmas, lifted by hopes for a US-Chinese trade deal, which eased some worries over the impact of the dispute on global growth.

While most previous shutdowns have been fairly short and have not affected the economy in the aggregate, Powell said, "if we have an extended shutdown, I think that would show up in the data pretty clearly".

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