Treasury Secretary Mnuchin: Two-day stock plunge a natural correction

Mnuchin: Stock market is seeing a natural correction 7:19 AM ET Fri, 12 Oct 2018 | 01:55Treasury Secretary Steven Mnuchin told CNBC on Friday this week’s stock market plunge was a “natural correction.” “The fundamentals are still very strong,” Mnuchin said in an interview with CNBC’s Geoff Cutmore from Bali, Indonesia, where the International Monetary Fund and World Bank were holding their annual meetings. This week’s decline in stocks, the worst since late March, was fueled by concern the Feder


Mnuchin: Stock market is seeing a natural correction 7:19 AM ET Fri, 12 Oct 2018 | 01:55Treasury Secretary Steven Mnuchin told CNBC on Friday this week’s stock market plunge was a “natural correction.” “The fundamentals are still very strong,” Mnuchin said in an interview with CNBC’s Geoff Cutmore from Bali, Indonesia, where the International Monetary Fund and World Bank were holding their annual meetings. This week’s decline in stocks, the worst since late March, was fueled by concern the Feder
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Company: cnbc, Activity: cnbc, Date: 2018-10-12  Authors: matthew j belvedere
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Treasury Secretary Mnuchin: Two-day stock plunge a natural correction

Treasury Sec. Mnuchin: Stock market is seeing a natural correction 7:19 AM ET Fri, 12 Oct 2018 | 01:55

Treasury Secretary Steven Mnuchin told CNBC on Friday this week’s stock market plunge was a “natural correction.”

“Markets tend to go too far in both directions,” he said.

He also said the U.S. economic story is “incredibly positive” and inflation is under control.

“The fundamentals are still very strong,” Mnuchin said in an interview with CNBC’s Geoff Cutmore from Bali, Indonesia, where the International Monetary Fund and World Bank were holding their annual meetings.

“The U.S. economy is strong. U.S. earnings are strong. I see this as just a natural correction after the markets were up a lot.”

There’s really “no new information in the market” on inflation, interest rates or trade, he added in the interview, which aired on “Squawk Box.”

Global finance leaders are trying to make sense of the U.S. stock market rout that took the Dow Jones Industrial Average down another 545 points on Thursday for a two-day plunge of nearly 1,400 points or more than 5.2 percent.

The S&P 500 and Nasdaq suffered similar percentage declines.

In premarket trading Friday, the indexes were pointing to solid gains at the open.

This week’s decline in stocks, the worst since late March, was fueled by concern the Federal Reserve might raise interest rates more than forecast.

President Donald Trump has repeatedly slammed Fed Chairman Jerome Powell, saying the central bank is increasing rates too quickly and that stronger economic growth won’t lead to problematic inflation.

The Fed has not been damaged by any comments by Trump, Mnuchin said. “The president has been clear, he likes low rates,” the Treasury secretary added, stressing the White House respects the independence of the central bank.

“[Trump] doesn’t feel that he has to attack at all,” Mnuchin said. “The president is concerned about the Fed raising interest rates too much and slowing down the economy. And those are, obviously, natural concerns.”

Mnuchin said Powell is doing a “good job” and “understands the regulatory environment” around the financial industry. “We took bank regulations too far in the other direction” since the 2008 financial crisis.

In 2018, the Fed increased rates in three 0.25 percentage point moves in March, June, and September to a range of 2 to 2.25 percent. Another hike is expected in December.

After their September meeting, central bankers were projected on a path to raise rates to 3.4 percent, before pausing.

The current knock on stocks and the spike in bond yields can be traced back to remarks last week from Powell about monetary policy being a “long way” from neutral.

The recent rise in bond yields is a reflection of a “normalization in the yield curve,” Mnuchin told CNBC on Friday. It makes sense for that normalization to be happening “at the same time as a correction in the stock market,” he said.

As far as global demand for American bonds, Mnuchin said he’s not worried about China selling its stockpile of U.S. Treasurys in retaliation over trade. He said there’s plenty of demand for U.S. government debt.


Company: cnbc, Activity: cnbc, Date: 2018-10-12  Authors: matthew j belvedere
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‘I would not associate Jay Powell with craziness,’ says IMF’s Christine Lagarde

International Monetary Fund managing director Christine Lagarde said Thursday she “would not associate” U.S. Federal Reserve Chairman Jerome Powell “with craziness.” “I would not associate Jay Powell with craziness. Lagarde made the comment in response to a question from CNBC’s Geoff Cutmore about U.S. President Donald Trump. I think the Fed has gone crazy,” the president said after walking off Air Force One in Erie, Pennsylvania for a rally. Lagarde added: “All over the world, it is certainly a


International Monetary Fund managing director Christine Lagarde said Thursday she “would not associate” U.S. Federal Reserve Chairman Jerome Powell “with craziness.” “I would not associate Jay Powell with craziness. Lagarde made the comment in response to a question from CNBC’s Geoff Cutmore about U.S. President Donald Trump. I think the Fed has gone crazy,” the president said after walking off Air Force One in Erie, Pennsylvania for a rally. Lagarde added: “All over the world, it is certainly a
‘I would not associate Jay Powell with craziness,’ says IMF’s Christine Lagarde Cached Page below :
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Keywords: news, cnbc, companies, walking, christine, jay, associate, president, bank, fed, imfs, craziness, certainly, central, powell, think, world, lagarde


'I would not associate Jay Powell with craziness,' says IMF's Christine Lagarde

International Monetary Fund managing director Christine Lagarde said Thursday she “would not associate” U.S. Federal Reserve Chairman Jerome Powell “with craziness.”

“I would not associate Jay Powell with craziness. No, no, he comes across, and members of his board, as extremely serious, solid and certainly keen to base their decisions on actual information, and decide to communicate that properly,” she said, speaking to CNBC at the IMF and World Bank annual meetings in Bali, Indonesia.

Lagarde made the comment in response to a question from CNBC’s Geoff Cutmore about U.S. President Donald Trump. The American leader knocked the Fed on Wednesday for continuing to raise interest rates despite some recent market turbulence.

“I think the Fed is making a mistake. They are so tight. I think the Fed has gone crazy,” the president said after walking off Air Force One in Erie, Pennsylvania for a rally.

Lagarde added: “All over the world, it is certainly a good principle to have independence of the central banks and of the central bank governors. Certainly we have advocated that in all countries, and I think that the Fed is no exception.”


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Dina Powell leaning toward staying at Goldman Sachs instead of becoming Trump’s UN ambassador

Before her stint in the Trump White House, Powell led Goldman’s Impact Investing Business and the Environmental Markets Group for almost a decade. Powell became close with the president’s elder daughter, Ivanka Trump, as they formed an alliance during the early stages of the Trump administration. Haley, once a close colleague of Powell’s, was also known to be friendly with Ivanka Trump and her husband Jared Kushner. In a tweet after Haley declared she would be leaving, Ivanka Trump said that she


Before her stint in the Trump White House, Powell led Goldman’s Impact Investing Business and the Environmental Markets Group for almost a decade. Powell became close with the president’s elder daughter, Ivanka Trump, as they formed an alliance during the early stages of the Trump administration. Haley, once a close colleague of Powell’s, was also known to be friendly with Ivanka Trump and her husband Jared Kushner. In a tweet after Haley declared she would be leaving, Ivanka Trump said that she
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Keywords: news, cnbc, companies, instead, goldman, ivanka, dina, ambassador, white, haleys, administration, trumps, jared, sachs, trump, close, powell, staying, haley, leaning


Dina Powell leaning toward staying at Goldman Sachs instead of becoming Trump's UN ambassador

Dina Powell, a Goldman Sachs executive and former deputy national security advisor to President Donald Trump, has been telling friends that she’s leaning toward staying at the firm instead of becoming the next U.S. ambassador to the United Nations, according to three people with direct knowledge of the matter.

Powell was being considered to succeed Nikki Haley to represent the United States at the U.N. and was one of Trump’s top picks for the post.

A spokesman for Goldman declined to comment Thursday. A White House spokesperson did not return a request for comment.

Later Thursday, Reuters, citing a senior administration official, reported that Powell was no longer under consideration for the role.

Powell had been speaking with senior administration officials about the role in the lead-up to Haley’s sudden and surprising resignation on Tuesday, sources previously told CNBC.

Trump noted throughout the week that Powell was on his list of candidates to succeed Haley and all signs pointed to her getting the position.

“Dina is certainly a person I would consider and she’s under consideration,” Trump said Tuesday.

However over the past 24 hours, Powell has become increasingly aware of the difficulties she may have faced getting through a Senate confirmation hearing without being grilled about her work at Goldman, according to one source briefed on the matter.

This person, who spoke on condition of anonymity, said Powell was concerned about lawmakers, such as longtime Wall Street critic Sen. Elizabeth Warren, trying to paint her as someone linked to big business “fat cats.”

A source close to Powell had previously told CNBC that she was also happy working at the bank.

Before her stint in the Trump White House, Powell led Goldman’s Impact Investing Business and the Environmental Markets Group for almost a decade. After she left the administration, she joined the firm’s management committee and is responsible for strengthening Goldman’s foreign relationships.

Powell made key alliances during her time in the White House.

Powell became close with the president’s elder daughter, Ivanka Trump, as they formed an alliance during the early stages of the Trump administration.

Haley, once a close colleague of Powell’s, was also known to be friendly with Ivanka Trump and her husband Jared Kushner.

Haley praised the couple during her resignation announcement Tuesday. “I can’t say enough good things about Jared and Ivanka,” she said. “Jared is such a hidden genius that no one understands.”

In a tweet after Haley declared she would be leaving, Ivanka Trump said that she was “grateful for her [Haley’s] friendship.”

Powell and Haley apparently also have a close relationship.

The outgoing U.N. ambassador tweeted a photo of herself, Powell and others spending time together in Haley’s home state of South Carolina.


Company: cnbc, Activity: cnbc, Date: 2018-10-11  Authors: brian schwartz, rex features, ap images
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Trump says the Federal Reserve caused the stock market correction, but he won’t fire Chair Powell

President Donald Trump continued to attack the Federal Reserve on Thursday, saying Chairman Jerome Powell is being too stringent with monetary policy and is making a mistake. “It’s a correction that I think is caused by the Fed and interest rates,” Trump said from the Oval Office. Trump said he believes that the Fed’s monetary policy “is far too stringent,” adding that “they’re making a mistake and it’s not right.” In a response to whether he is considering firing Powell, Trump said, “No, I’m no


President Donald Trump continued to attack the Federal Reserve on Thursday, saying Chairman Jerome Powell is being too stringent with monetary policy and is making a mistake. “It’s a correction that I think is caused by the Fed and interest rates,” Trump said from the Oval Office. Trump said he believes that the Fed’s monetary policy “is far too stringent,” adding that “they’re making a mistake and it’s not right.” In a response to whether he is considering firing Powell, Trump said, “No, I’m no
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Company: cnbc, Activity: cnbc, Date: 2018-10-11  Authors: michael sheetz, thomas franck
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Trump says the Federal Reserve caused the stock market correction, but he won't fire Chair Powell

President Donald Trump continued to attack the Federal Reserve on Thursday, saying Chairman Jerome Powell is being too stringent with monetary policy and is making a mistake.

He blamed the Fed for causing a massive drop in stocks this week that took the Dow Jones Industrial Average down more than 800 points on Wednesday alone. Stocks fell again Thursday.

“It’s a correction that I think is caused by the Fed and interest rates,” Trump said from the Oval Office. “The dollar is very strong, very powerful – and it causes difficulty doing business.”

Trump said he believes that the Fed’s monetary policy “is far too stringent,” adding that “they’re making a mistake and it’s not right.”

In a response to whether he is considering firing Powell, Trump said, “No, I’m not going to fire him. I’m just disappointed.”

The Federal Reserve Act of 1913 outlines the appointment and removal of Fed officials, saying they are to serve four-year terms “unless sooner removed for cause by the President.” The act does not clarify what the required magnitude is for the president’s cause of removal.


Company: cnbc, Activity: cnbc, Date: 2018-10-11  Authors: michael sheetz, thomas franck
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Cramer: If Fed chief Powell were to ‘walk back’ aggressive rate remarks, Wall Street could rally

Cramer predicts Powell could ‘walk back’ his comments on rates 12 Hours Ago | 00:35Federal Reserve Chairman Jerome Powell could “walk back” his aggressive statements on interest rates, CNBC’s Jim Cramer predicted Wednesday. “All he has to do is say, ‘You know what, I think that everything is on the table,'” Cramer said on “Squawk on the Street.” If Powell were to say, “I’m paying attention to all the data,” then we would rally, added Cramer as Wall Street opened lower, and shortly after took a s


Cramer predicts Powell could ‘walk back’ his comments on rates 12 Hours Ago | 00:35Federal Reserve Chairman Jerome Powell could “walk back” his aggressive statements on interest rates, CNBC’s Jim Cramer predicted Wednesday. “All he has to do is say, ‘You know what, I think that everything is on the table,'” Cramer said on “Squawk on the Street.” If Powell were to say, “I’m paying attention to all the data,” then we would rally, added Cramer as Wall Street opened lower, and shortly after took a s
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Company: cnbc, Activity: cnbc, Date: 2018-10-10  Authors: berkeley lovelace jr, scott mlyn
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Cramer: If Fed chief Powell were to 'walk back' aggressive rate remarks, Wall Street could rally

Cramer predicts Powell could ‘walk back’ his comments on rates 12 Hours Ago | 00:35

Federal Reserve Chairman Jerome Powell could “walk back” his aggressive statements on interest rates, CNBC’s Jim Cramer predicted Wednesday.

“All he has to do is say, ‘You know what, I think that everything is on the table,'” Cramer said on “Squawk on the Street.”

If Powell were to say, “I’m paying attention to all the data,” then we would rally, added Cramer as Wall Street opened lower, and shortly after took a sharp 1.5 percent leg down.

The Fed didn’t immediately respond to CNBC’s request for comment.

Powell’s remarks last week sent bond yields soaring to seven-year highs and put pressure on the stock market because higher rates make equities less valuable.


Company: cnbc, Activity: cnbc, Date: 2018-10-10  Authors: berkeley lovelace jr, scott mlyn
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Cramer: I don’t want a ‘Fed-mandated slowdown, but we sure seem to be getting one’ in the market

But I also like the stock market going higher,” Cramer said Monday on “Squawk on the Street.” “I don’t want to get a Fed-mandated slowdown, but we sure seem to be getting one.” Cramer said central bankers need to look at the economic data, which he says, show steady growth without problematic inflation. There’s no reason for the Fed to raise rates more aggressively, he contended. “A real slowdown in the economy could occur here; not a recession, but a slowdown.”


But I also like the stock market going higher,” Cramer said Monday on “Squawk on the Street.” “I don’t want to get a Fed-mandated slowdown, but we sure seem to be getting one.” Cramer said central bankers need to look at the economic data, which he says, show steady growth without problematic inflation. There’s no reason for the Fed to raise rates more aggressively, he contended. “A real slowdown in the economy could occur here; not a recession, but a slowdown.”
Cramer: I don’t want a ‘Fed-mandated slowdown, but we sure seem to be getting one’ in the market Cached Page below :
Company: cnbc, Activity: cnbc, Date: 2018-10-08  Authors: matthew j belvedere
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Cramer: I don't want a 'Fed-mandated slowdown, but we sure seem to be getting one' in the market

The shift at the Federal Reserve under Jerome Powell’s leadership from being data-dependent to being blinded by the desire to normalize interest rates could spell trouble for stocks, according to CNBC’s Jim Cramer.

“I happen to like Mr. Powell very much. But I also like the stock market going higher,” Cramer said Monday on “Squawk on the Street.” “I don’t want to get a Fed-mandated slowdown, but we sure seem to be getting one.”

Cramer said central bankers need to look at the economic data, which he says, show steady growth without problematic inflation. There’s no reason for the Fed to raise rates more aggressively, he contended. “A real slowdown in the economy could occur here; not a recession, but a slowdown.”

The “Mad Money” host expressed concerns about Powell’s comments last week, in which the Fed chair said the central bank still has a ways to go yet before it gets rates to where they are neither restrictive nor accommodative.

“The Fed being lockstep instead of being data-dependent is very bad for the stock market,” contended Cramer, longing for the Janet Yellen days at the Fed when data dependency was the mantra.

There’s been a debate for 10 years about when and how much the Fed should be taking its foot off the gas in terms of the easy money rates that were put in place to prop up economic growth, and by extension, risk assets in the wake of the 2008 financial crisis.

With a third increase this year, the current range for the Fed’s benchmark rate is 2 percent to 2.25 percent. Projections released after last month’s policy meeting indicated central bankers were likely to take the funds rate to 3.4 percent before pausing. Another 0.25 percent rate rise is expected in December.

“We do not want American industry choked off, particularly at a time when we’re putting through tariffs,” said Cramer, whose argument echoes criticism President Donald Trump levied at Powell in a July interview on CNBC and elsewhere.

Trump told CNBC’s Joe Kernen about month after the Fed’s June rate hike that he is “not happy” that every time the economy shows more strength “they want to raise rates again.” But in this rare White House rebuke of the Fed, Trump also said, referring to Powell, that he “put a very good man” in charge of the central bank.


Company: cnbc, Activity: cnbc, Date: 2018-10-08  Authors: matthew j belvedere
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Fed Chair Powell’s remarks this year have cost the stock market $1.5 trillion, JP Morgan says

When Federal Reserve Chairman Jerome Powell starts talking, the market starts worrying. Since the central bank chief took over in February, his public remarks have cost the market dearly — specifically about a $1.5 trillion loss in market cap, according to a J.P. Morgan analysis. Adding up the occasions when Powell has spoken publicly equaled the $1.5 trillion figure. Powell’s public schedule will accelerate in 2019, when he starts hosting news conferences after every meeting rather than just qu


When Federal Reserve Chairman Jerome Powell starts talking, the market starts worrying. Since the central bank chief took over in February, his public remarks have cost the market dearly — specifically about a $1.5 trillion loss in market cap, according to a J.P. Morgan analysis. Adding up the occasions when Powell has spoken publicly equaled the $1.5 trillion figure. Powell’s public schedule will accelerate in 2019, when he starts hosting news conferences after every meeting rather than just qu
Fed Chair Powell’s remarks this year have cost the stock market $1.5 trillion, JP Morgan says Cached Page below :
Company: cnbc, Activity: cnbc, Date: 2018-10-03  Authors: jeff cox
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Fed Chair Powell's remarks this year have cost the stock market $1.5 trillion, JP Morgan says

When Federal Reserve Chairman Jerome Powell starts talking, the market starts worrying.

Since the central bank chief took over in February, his public remarks have cost the market dearly — specifically about a $1.5 trillion loss in market cap, according to a J.P. Morgan analysis.

The bank’s strategists specifically found that when Powell gives a news conference after a Federal Open Market Committee meeting, the S&P 500 typically drops 0.44 percentage point and has fallen each of the three times he has spoken to the media.

When he delivers congressional testimony or other speeches, the average decline is 0.4 percentage point, with the index falling 5 out of the 9 occasions. Adding up the occasions when Powell has spoken publicly equaled the $1.5 trillion figure.

If the trend persists, it could be worrisome for the market. Powell’s public schedule will accelerate in 2019, when he starts hosting news conferences after every meeting rather than just quarterly.

The possible reason for the decline, according to the analysis: Worry that Powell and the Fed by extension aren’t understanding the current landscape.

“Specifically, the equity market likely implies that the Fed is underestimating various risks, and hence is increasing the implied probability of the Fed committing a policy error in the future,” Marko Kolanovic, global head of quantitative and derivatives strategy, wrote in the report. “A higher probability of a policy error translates into lower equity prices on the news.”

Overall, the market has done quite well this year.

The S&P 500 has risen about 9.6 percent, even though the Fed has increased interest rates three times. Powell has repeatedly said that he believes the economic outlook is strong and that this is a good time for the central bank to normalize policy after years of an ultra-accommodative stance.

However, the market hasn’t liked what it has heard specifically from him — and neither has President Donald Trump.

Trump has criticized the Fed on several occasions, a move unusual for a president, saying he is worried the Fed’s insistence on raising interest rates could cost the economy the substantial momentum it has built up since the 2016 elections.

The J.P. Morgan paper said there appears to be direct causation between Powell’s remarks and stocks because the market had taken a discernible change in direction during the days when the Fed chief spoke.

The bank cited three troublesome statements from Powell: That stocks are overvalued, that multiple rate hikes are needed or necessary, and that a stock market “sell-off warrants attention if sustained.” Kolanovic said that implies the Fed doesn’t understand market structure and may stay on the sidelines too long.

“If fundamental investors start questioning the cycle, a technically driven sell-off could be more violent and more likely to deliver a knock-out punch to the economic cycle,” he wrote. “The new microstructure of financial markets would not leave enough time for the Fed to react.”

CNBC has contacted the Fed for comment.


Company: cnbc, Activity: cnbc, Date: 2018-10-03  Authors: jeff cox
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Powell says we’re ‘a long way’ from neutral on interest rates, indicating more hikes are coming

Federal Reserve Chairman Jerome Powell said the central bank has a ways to go yet before it gets interest rates to where they are neither restrictive nor accommodative. “The really extremely accommodative low interest rates that we needed when the economy was quite weak, we don’t need those anymore. “Interest rates are still acommodative, but we’re gradually moving to a place where they will be neutral,” he added. “We may go past neutral, but we’re a long way from neutral at this point, probably


Federal Reserve Chairman Jerome Powell said the central bank has a ways to go yet before it gets interest rates to where they are neither restrictive nor accommodative. “The really extremely accommodative low interest rates that we needed when the economy was quite weak, we don’t need those anymore. “Interest rates are still acommodative, but we’re gradually moving to a place where they will be neutral,” he added. “We may go past neutral, but we’re a long way from neutral at this point, probably
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Powell says we're 'a long way' from neutral on interest rates, indicating more hikes are coming

Federal Reserve Chairman Jerome Powell said the central bank has a ways to go yet before it gets interest rates to where they are neither restrictive nor accommodative.

In a question and answer session Wednesday with Judy Woodruff of PBS, Powell said the Fed no longer needs the policies that were in place that pulled the economy out of the financial crisis malaise.

“The really extremely accommodative low interest rates that we needed when the economy was quite weak, we don’t need those anymore. They’re not appropriate anymore,” Powell said.

“Interest rates are still acommodative, but we’re gradually moving to a place where they will be neutral,” he added. “We may go past neutral, but we’re a long way from neutral at this point, probably.”

The question of the neutral rate is critical for the Fed’s policymaking. Officials have been debating for years where that level may be, with the Fed consensus near 3 percent. The current range for the central bank’s benchmark rate is 2 percent to 2.25 percent; projections released last week indicated the policymaking Federal Open Market Committee is likely to take the funds rate to 3.4 percent before pausing.

During the interview, the euro dropped to its lowest level since Aug. 21 as investors saw Powell’s remarks as affirmation of more rate hikes down the road.

Powell spoke on a number of issues as well:


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Powell pledges the Fed will ‘act with authority’ if inflation spikes

Federal Reserve policymakers have been able to stave off sharply higher inflation even with low unemployment by managing expectations, central bank Chairman Jerome Powell said Tuesday. Should those attitudes change, Powell said in a speech, the Fed won’t hesitate to respond. That defies an economic model called the Phillips curve, which generally shows that when joblessness falls inflation will rise. The unemployment rate currently stands at 3.9 percent, near a 50-year low, and core inflation is


Federal Reserve policymakers have been able to stave off sharply higher inflation even with low unemployment by managing expectations, central bank Chairman Jerome Powell said Tuesday. Should those attitudes change, Powell said in a speech, the Fed won’t hesitate to respond. That defies an economic model called the Phillips curve, which generally shows that when joblessness falls inflation will rise. The unemployment rate currently stands at 3.9 percent, near a 50-year low, and core inflation is
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Powell pledges the Fed will 'act with authority' if inflation spikes

Federal Reserve policymakers have been able to stave off sharply higher inflation even with low unemployment by managing expectations, central bank Chairman Jerome Powell said Tuesday.

Should those attitudes change, Powell said in a speech, the Fed won’t hesitate to respond.

“From the standpoint of contingency planning, our course is clear: Resolutely conduct policy consistent with the [Federal Open Market Committee’s] symmetric 2 percent inflation objective, and stand ready to act with authority if expectations drift materially up or down,” he told the National Association for Business Economics in Boston.

The past several years have seen an economic anomaly: sharply lower unemployment without an associated rise in labor costs. That defies an economic model called the Phillips curve, which generally shows that when joblessness falls inflation will rise.

Central bankers still believe in the Phillips curve even though the relationship seems to have broken down during a recovery that is less than a year away from being the longest on record.

Powell said the model isn’t dead, but instead is part of a change in circumstances that has taken place during an unprecedented time for the Fed.

“What is more likely, in my view, is that many factors, including better conduct of monetary policy over the past few decades, have greatly reduced, but not eliminated, the effects that tight labor markets have on inflation,” he said.

The Fed kept its benchmark interest rate anchored near zero for seven years while engaging in a bond-purchasing program that ballooned its balance sheet to more than $4.5 trillion. Along with that, the central bank used guidance to help manage inflation expectations, letting the market know that while the FOMC would be content to let inflation hold somewhat above or below its 2 percent target for a period of time, it would remain vigilant at making sure it didn’t move too far in either direction.

“When monetary policy tends to offset shocks to inflation, rather than amplifying and extending them, and when people come to expect this policy response, a surprise rise or fall in labor market tightness will naturally have smaller and less persistent effects on inflation,” Powell said.

The unemployment rate currently stands at 3.9 percent, near a 50-year low, and core inflation is right around 2 percent. Powell said the two numbers are part of a “very good” economy that boasts “a remarkably positive outlook” from forecasters.

He indicated the Fed will continue to raise rates but in the gradual manner that has accompanied the current cycle that began in December 2015. The central bank approved a quarter-point hike in the funds rate last week that brought the target range to 2 percent to 2.25 percent. FOMC members indicated another hike before the end of the year, three more in 2019 and likely one more in 2020 before pausing.

Powell said the policy is mindful of controlling growth while making sure the recovery continues.

“Removing accommodation too quickly could needlessly foreshorten the expansion,” he said. “Moving too slowly could risk rising inflation and inflation expectations. Our path of gradually removing accommodation, while closely monitoring the economy, is designed to balance these risks.”


Company: cnbc, Activity: cnbc, Date: 2018-10-02  Authors: jeff cox
Keywords: news, cnbc, companies, rate, unemployment, powell, fed, policy, act, spikes, authority, labor, inflation, expectations, market, central, pledges


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Fed’s Powell sees ‘remarkably positive outlook’ for economy that may be ‘too good to be true’

Federal Reserve Chair Powell says the US economy is looking good 5 Hours Ago | 01:22Federal Reserve Chairman Jerome Powell sees the U.S. economy generating highly optimistic expectations, with the unusual combination of low unemployment and inflation fueling hopes for an extended expansion. Historically, low unemployment has fueled inflation and sometimes has forced the Fed into hiking interest rates rapidly. “Since 1950, the U.S. economy has experienced periods of low, stable inflation and peri


Federal Reserve Chair Powell says the US economy is looking good 5 Hours Ago | 01:22Federal Reserve Chairman Jerome Powell sees the U.S. economy generating highly optimistic expectations, with the unusual combination of low unemployment and inflation fueling hopes for an extended expansion. Historically, low unemployment has fueled inflation and sometimes has forced the Fed into hiking interest rates rapidly. “Since 1950, the U.S. economy has experienced periods of low, stable inflation and peri
Fed’s Powell sees ‘remarkably positive outlook’ for economy that may be ‘too good to be true’ Cached Page below :
Company: cnbc, Activity: cnbc, Date: 2018-10-02  Authors: jeff cox
Keywords: news, cnbc, companies, expectations, unemployment, inflation, positive, good, economy, reserve, fed, conditions, outlook, running, remarkably, low, true, powell, feds, sees


Fed's Powell sees 'remarkably positive outlook' for economy that may be 'too good to be true'

Federal Reserve Chair Powell says the US economy is looking good 5 Hours Ago | 01:22

Federal Reserve Chairman Jerome Powell sees the U.S. economy generating highly optimistic expectations, with the unusual combination of low unemployment and inflation fueling hopes for an extended expansion.

In a speech Tuesday, the central bank chief said the jobless rate is running at 3.9 percent and inflation is around the Fed’s goal of 2 percent. Historically, low unemployment has fueled inflation and sometimes has forced the Fed into hiking interest rates rapidly.

“While these two top-line statistics do not always present an accurate picture of overall economic conditions, a wide range of data on jobs and prices supports a positive view,” Powell told economists at a Boston conference. “In addition, many forecasters are predicting that these favorable conditions are likely to continue.”

He pointed out that after last week’s Federal Open Market Committee meeting, a reporter asked him if the current conditions are “too good to be true,” which he called “a reasonable question.”

“From the standpoint of our dual mandate, this is a remarkably positive outlook,” he said, referencing forecasts from Fed officials, the Survey of Professional Forecasters and the Congressional Budget Office.

“Since 1950, the U.S. economy has experienced periods of low, stable inflation and periods of very low unemployment, but never both for such an extended time as is seen in these forecasts,” Powell added.

He attributed the balance to aggressive Fed action to control and respond to inflation expectations. If a belief grows that inflation is building, businesses sometimes will raise prices and increase wages to head it off. Similarly, a belief that inflation will remain too low also can depress activity.

Through forward guidance, the Fed has sought to manage those expectations and convince the public that it will keep inflation around the central bank’s 2 percent goal, Powell said.

In addition to the low unemployment and inflation, GDP grew at a 4.2 percent pace in the second quarter and could top 4 percent again in the fourth quarter. Consumer and business surveys also are running high, and corporate profits have been growing around 25 percent this year.

WATCH: Powell says US not on sustainable fiscal path


Company: cnbc, Activity: cnbc, Date: 2018-10-02  Authors: jeff cox
Keywords: news, cnbc, companies, expectations, unemployment, inflation, positive, good, economy, reserve, fed, conditions, outlook, running, remarkably, low, true, powell, feds, sees


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