Fed officials ponder the yield curve signal

Fed officials ponder the yield curve signal

Fed officials ponder the yield curve signal

U.S. Federal Reserve Chairman Jerome Powell said on August 24 that the economy is strong and there was no clear sign of inflation moving above the central bank's 2 percent target. "Inflation is near our 2 per cent objective and most people who want a job are finding one". In June, most Fed officials projected the natural rate of unemployment was between 4.1% and 4.7%.

Long-dated bonds are meanwhile being supported by restrained inflation and demand by foreign central banks that are continuing bond purchase programs.

Based on the futures market, investors are nearly certain Fed policymakers will raise the benchmark interest rate to a range of 2 percent to 2.25 percent at its next meeting in late September, which would be the highest interest rates in a decade but not high by historical standards.

Still some saw Powell as unlikely to give much further insight on the Fed's rate path for this year.

Once unemployment falls below that level, inflation pressures can build, forcing the Fed to raise interest rates.

The Fed is very confident in the US economy and Powell indicated there is no intention of slowing down the Fed's rate hikes, said Chris Zaccarelli, chief investment officer at Independent Advisor Alliance in Charlotte, North Carolina.

The Dow Jones Industrial Average index added 134 points, or 0.52% to 25,791, led higher by DowDuPont Inc, and Visa Inc. It marked the second time this summer that Trump had publicly criticized the policymaking of the Fed.

A Grand Teton National Park officer stands watch Friday outside the room where the Jackson Hole Economic Policy Symposium was taking place at Jackson. In his view, that's why the Fed can continue with a gradual pace of rate hikes that began under Yellen.

In late NY trading, the euro was up to 1.1625 dollars from 1.1536 dollars in the previous session, and the British pound increased to 1.2847 dollars from 1.2814 us dollars in the previous session. "I'm not thrilled", Trump said in an interview with Reuters. "I'm now at 2.75 percent to 3 percent for the year, probably closer to 3 percent", Mester said.

Bullard seems to back President Trump in not wanting to raise rates, but of course, he has no say.

Fed Chairman Jerome Powell is due to speak at the conference and is widely expected to also signal more rate hikes ahead. The Fed's economic projections, compiled from estimates of all its officials, estimates the current neutral rate at 2.9 per cent.

The Fed now has raised the federal funds rate by 0.25 of a percentage point seven times since December 2015 after holding the rate at an unprecedented level of near zero for seven years to ease the effects of the recession and the financial crisis.

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