Fed Chair Jerome Powell's speech at the Jackson Hole Economic Policy Symposium provided no support for the US Dollar as he noted that the gradual pace of rate hikes remains appropriate, leaving market pricing unchanged for the timeline of when the Fed will move next.
Strong economic growth, strong earnings and low interest rates have combined to continue to move the US equity market higher, said Leo Grohowski, chief investment officer for BNY Mellon Wealth Management.
"The FOMC has been navigating between the shoals of overheating and premature tightening with only a hazy view of what seem to be shifting navigational guides", he said.
After all, the Fed's decisions on monetary policy...
Powell focused his remarks in part on the difficulty the Fed faces in setting interest-rate policies at a time when the economy seems to be undergoing changes that challenge long-standing beliefs of how low unemployment can fall before it ignites inflation pressures.
However, some Fed officials anxious that an escalation in current trade disputes could force the central bank to rethink its interest rate hike plans, according to the minutes of the Fed's latest monetary policy meeting.
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It was the latest hint that the first lady might be subtly separating herself from her husband and his controversial views. President Cyril Ramaphosa's spokeswoman said the government would "take up the matter through diplomatic channels".
Powell's comments were not a direct response to Trump's criticism that he is "not thrilled" with the Fed raising rates as he is trying to stimulate economic growth.
The Jackson Hole speech follows closely behind President Trump's criticism of the Fed for its continued tightening of United States monetary policy ever since Powell, who was nominated for the role by Trump, took the helm in February.
The Fed has raised interest rates seven times since the end of 2015, including twice in 2018, taking the Fed Funds rate range to between 1.75% and 2%.
"Because monetary policy acts with a lag, waiting for inflation to materialize is undesirable", the paper said. Hawkish members of the Fed board have expressed fears that moving too slowly could risk rampant inflation, but more liberal officials see no need slow down the economy while prices stay mostly stable.
Although Trump has frequently boasted incorrectly that the USA economy is doing better than it ever has, he complained that "I should be given some help by the Fed".
"If markets conclude that the Fed may increase rates further, that will keep the dollar strong", he said.
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US central bankers are raising interest rates gradually to keep inflation in check while at the same time giving the almost decade-long expansion room to run.
"W$3 hen you are uncertain about the effects of your actions, you should move conservatively", Powell said.
Though he did not directly address the geopolitical turmoil, Powell did say that if strong growth in income and jobs continues, further gradual increases for the federal funds rate will "likely be appropriate".
-China tariffs boosted the greenback and the annual Federal Reserve conference in Jackson Hole, Wyoming began.
"I am confident that the FOMC would absolutely "do whatever it takes" should inflation expectations drift materially up or down or should crisis again threaten", he said. But inflation has just risen to the Fed's 2 percent target range after years of low levels, and does not appear to be accelerating.
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