Don't expect big interest rate hikes, Fed chief Powell says


Trump has charged that the Fed is "going wild" and "going loco" and that the rate hikes are threatening to ruin the economic gains generated by his policies, including last year's tax cuts.

Trump on Tuesday again blasted his hand-picked chief of the U.S. central bank, saying he was "not even a little bit happy" with his selection of Powell.

"So far, I'm not even a little bit happy with my selection of [Jerome Powell]".

"I'm doing deals, and I'm not being accommodated by the Fed", he told the Post.

Stocks surged following Federal Reserve chair Jerome Powell's comments at the Economic Club of NY during which he addressed risk factors to the health of the economy, softened his tone on monetary policy, and offered a fairly reassuring check-up on the economy on the heels of sharp disapproval from President Trump.

But the odds of a 0.25-point rise in March have fallen to 34% from 50% according to FactSet.

A 2015 report by the Congressional Budget Office and Dean Baker, a director at the Center for Economic and Policy Research in Washington, states that higher interest rates lead to larger budget deficits.

Reporting from the club in NY just as Powell's speech was wrapping up, Cheddar's Kristen Scholer said Powell avoided the subject of Trump altogether and fielded no questions about the President's ongoing criticism.

The federal funds rate is now between two percent and 2.25 percent.

Powell has been gradually raising rates since he was confirmed to his position by Trump in January. In the past when reporters have raised the issue of the president's complaints, Powell has said they would have no effect on the Fed's rate policy. That gave Carter an opening to make Paul Volcker the Fed chairman, someone the Carter administration regarded as better equipped to combat high inflation.

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Elsewhere, Indonesia's rupiah climbed as the nation's central bank said it will provide room for the currency to keep strengthening in line with market mechanisms.

"I think the Fed is making a mistake".

Trump has even been asked whether he would try to oust Powell.

"Global central bank tightening (of rates) was probably the biggest risk that equity investors faced over the next four quarters, so having the Fed chairman come out and suggest they're nearly done is welcome news".

BlackRock global fixed income CIO Rick Rieder sees a December rate hike and then maybe only one or two next year.

The report is the first of what the Fed intends as a twice yearly review of risks to financial stability, defined as the degree to which the financial system can continue to lend to businesses and households even when subjected to an outside shock.

With Powell now out of the way, the market is looking for any hopeful signals on trade from a meeting between the USA and Chinese presidents that will take place at the Group of 20 summit in Buenos Aires this weekend.

For his part, Bianco also said anxiety aside, old sources of risk ー like the banking system, the credit markets, the mortgage markets, or too much leverage ー won't cause the next financial crisis.

While Powell said Fed officials are monitoring these risks, they are not on the whole too anxious about them.