The focus this week shifts to the US Federal Reserve Chief's monetary policy testimony on Capitol Hill. FED Chief Jerome Powell will face severe pressure from Congress to cut rates to keep the economy humming during an election year.

FED's Powell to reinforce 'no rush to cut'

Federal Reserve Chair Jerome Powell conveyed a message of caution in deciding when to cut the benchmark interest rate, emphasising the importance of prudence in a Sunday night interview with CBS's "60 Minutes." <o:p></o:p>

This is based on a Reuters report.<o:p></o:p>

Powell highlighted the need to give time for the data to confirm a sustainable move toward the Federal Reserve's 2 per cent inflation target.<o:p></o:p>

&nbsp;"The prudent thing to do is...to just give it some time and see that the data confirm that inflation is moving down to 2 per cent in a sustainable way," Reuters quoted him as saying. <o:p></o:p>

Powell emphasised the strength of the current economy, reducing the risk of recession as policymakers await conclusive data to support potential rate cuts.<o:p></o:p>

The interview, conducted on Thursday before a robust January jobs report on Friday, showcased Powell's measured approach amid a thriving US economy. <o:p></o:p>

The January jobs report revealed the addition of 353,000 new positions, robust wage growth, and a stable unemployment rate at 3.7 per cent over the past two years. <o:p></o:p>

Powell refrained from labelling the current situation as a "soft-landing" but acknowledged the unusual circumstances. <o:p></o:p>

He underlined the Federal Reserve's commitment to monitoring risks to both price stability and maximum employment, considering job growth as a factor that could influence the pace of rate cuts.<o:p></o:p>

Powell, addressing the widely watched "60 Minutes," emphasised the Federal Reserve's focus on the real economy and making decisions for the medium and long term. <o:p></o:p>

He expressed the need to strike a balance between the risk of moving too soon or too late in adjusting interest rates. <o:p></o:p>

Powell used the platform to communicate a positive outlook, stating, "We think the economy's in a good place. We think inflation is coming down." <o:p></o:p>

The Federal Reserve Chair reiterated the importance of gaining confidence in the sustainable decline of inflation toward the 2 per cent goal.<o:p></o:p>

In the wide-ranging conversation, Powell reiterated comments made during the press conference after the recent Federal Reserve meeting, where the benchmark interest rate was held steady. <o:p></o:p>

He indicated that the next meeting in March might be too soon for rate cuts to commence. <o:p></o:p>

Powell acknowledged the potential impact of outside shocks, including geopolitical crises globally. <o:p></o:p>

However, he downplayed some economic trouble spots, suggesting that issues like China's real estate problems and slowing growth might have less impact on the US than anticipated.<o:p></o:p>

(With inputs from Reuters)<o:p></o:p>

Federal Reserve Chair Jerome Powell conveyed a message of caution in deciding when to cut the benchmark interest rate, emphasising the importance of prudence in a Sunday night interview with CBS's "60 Minutes.

Federal Reserve Chair Jerome Powell conveyed a message of caution in deciding when to cut the benchmark interest rate, emphasising the importance of prudence in a Sunday night interview with CBS's "60 Minutes." This is based on a Reuters report. Powell highlighted the need to give time for the data to confirm a sustainable move toward the Federal Reserve's 2 per cent inflation target. "The prudent thing to do is...to just give it some time and see that the data confirm that inflation is moving down to 2 per cent in a sustainable way," Reuters quoted him as saying. Powell emphasised the strength of the current economy, reducing the risk of recession as policymakers await conclusive data to support potential rate cuts. The interview, conducted on Thursday before a robust January jobs report on Friday, showcased Powell's measured approach amid a thriving US economy. The January jobs report revealed the addition of 353,000 new positions, robust wage growth, and a stable unemployment rate at 3.7 per cent over the past two years. Powell refrained from labelling the current situation as a "soft-landing" but acknowledged the unusual circumstances. He underlined the Federal Reserve's commitment to monitoring risks to both price stability and maximum employment, considering job growth as a factor that could influence the pace of rate cuts. Powell, addressing the widely watched "60 Minutes," emphasised the Federal Reserve's focus on the real economy and making decisions for the medium and long term. He expressed the need to strike a balance between the risk of moving too soon or too late in adjusting interest rates. Powell used the platform to communicate a positive outlook, stating, "We think the economy's in a good place. We think inflation is coming down." The Federal Reserve Chair reiterated the importance of gaining confidence in the sustainable decline of inflation toward the 2 per cent goal. In the wide-ranging conversation, Powell reiterated comments made during the press conference after the recent Federal Reserve meeting, where the benchmark interest rate was held steady. He indicated that the next meeting in March might be too soon for rate cuts to commence. Powell acknowledged the potential impact of outside shocks, including geopolitical crises globally. However, he downplayed some economic trouble spots, suggesting that issues like China's real estate problems and slowing growth might have less impact on the US than anticipated. (With inputs from Reuters)

Federal Reserve Chair Powell signals prudence in considering rate cuts amid strong economy

It is late August, meaning that the annual conference of the Kansas City Fed, which will be attended by leading central bankers from all around the world is to take place in Jackson Hole. As usual, everyone is particularly interested in hearing what Federal Reserve Chair Jerome Powell, who is scheduled to speak Friday morning, might have to say.

The minutes of the July policy meeting held by the US central bank were recently released, and it was clear from the records that most Federal Reserve members at the time viewed a large upside risk to inflation, which may have necessitated even further tightening. On the other hand, two also backed maintaining current rates, the first significant indication of disagreement over the course of action in a long time.

Key data points since that meeting have demonstrated that price and wage pressures are continuing to diminish, which should support the argument for stopping rate hikes. Although consumer expenditure and labor-market activity indices have continued to show improvement, authorities may nonetheless be concerned about the likelihood of an ongoing decline in inflation.

A crucial question is how Powell might be considering those developments. In addition, any hints as to how the central bank might be formulating a strategy for rate decreases in 2024 will also be closely watched. Otherwise, participants will take interest in active discussions regarding “Structural Shifts in the Global Economy,” the retreat’s main theme this year.

(With inputs from agencies)

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It is late August, meaning that the annual conference of the Kansas City Fed, which will be attended by leading central bankers from all around the world is to take place in Jackson Hole.

It is late August, meaning that the annual conference of the Kansas City Fed, which will be attended by leading central bankers from all around the world is to take place in Jackson Hole. As usual, everyone is particularly interested in hearing what Federal Reserve Chair Jerome Powell, who is scheduled to speak Friday morning, might have to say. The minutes of the July policy meeting held by the US central bank were recently released, and it was clear from the records that most Federal Reserve members at the time viewed a large upside risk to inflation, which may have necessitated even further tightening. On the other hand, two also backed maintaining current rates, the first significant indication of disagreement over the course of action in a long time. Key data points since that meeting have demonstrated that price and wage pressures are continuing to diminish, which should support the argument for stopping rate hikes. Although consumer expenditure and labor-market activity indices have continued to show improvement, authorities may nonetheless be concerned about the likelihood of an ongoing decline in inflation. A crucial question is how Powell might be considering those developments. In addition, any hints as to how the central bank might be formulating a strategy for rate decreases in 2024 will also be closely watched. Otherwise, participants will take interest in active discussions regarding “Structural Shifts in the Global Economy,” the retreat’s main theme this year. (With inputs from agencies) WATCH WION LIVE HERE

All eyes now on Federal Reserve Chief Powell in Jackson Hole: Report  

U.S. banks have tightened their lending standards for both businesses and households in the second quarter of 2023, and they anticipate maintaining this cautious approach for the rest of the year, according to a survey conducted by the Federal Reserve and cited by Bloomberg. The survey of loan officers revealed a multitude of reasons behind this tightening, including a volatile economic outlook, declining credit quality in loan portfolios, concerns about bank funding costs, and deposit outflows.

Federal Reserve Chairman Jerome Powell commented on the survey, acknowledging that the overall lending conditions are tight and continue to tighten. As a result of these conditions, the Fed took decisive action by raising interest rates to their highest level since March 2001.

Factors at play

Among the factors contributing to the banks' increased caution are worries about the potential impact of legislative, supervisory, or accounting changes. Recently, the Federal Reserve and other regulators proposed a 16 per cent aggregate increase in capital requirements for banks with assets exceeding $100 billion, aiming to strengthen lenders against potential future challenges.

In response to the impending regulatory changes, some banks are already taking preventive measures, pulling back on lending or issuing warnings about potential future restrictions. The survey also revealed a decline in demand for new loans across various categories, affecting consumers, businesses, and commercial and residential real estate sectors.

Throughout the year, growth in U.S. bank lending has slowed, coinciding with the Federal Reserve's aggressive campaign to combat inflation by raising interest rates and subsequently increasing borrowing costs. As a result, banks are setting aside more funds for future loan losses, signifying their apprehension about worsening credit conditions.

Loan demand outlook in focus

Despite the tightening lending landscape, JPMorgan Chase's Chief Financial Officer, Jeremy Barnum, expressed optimism about reasonably robust loan card growth, particularly in auto loans. However, he also stated that the outlook for loan demand in other areas, including consumer and wealth sectors, is not as promising.

Slower bank lending can serve as a potential recession indicator, though it is not always definitive. According to Apollo's Chief Economist, Torsten Slok, the 'maximum negative impact' of tighter credit conditions on the gross domestic product (GDP) can take up to a year and a half to materialise.

While the possibility of a recession was a concern, the latest data from the Bureau of Labour Statistics has shown that the U.S. economy grew faster in the second quarter compared to the first. As a result, the growing consensus suggests that the immediate threat of a recession is diminishing.

Federal Reserve Chairman Jerome Powell echoed this sentiment, stating that the strong economic performance has instilled confidence in the country's economic outlook. Despite this optimism, the cautious approach taken by banks toward lending underscores the ongoing uncertainty surrounding the economic landscape.

(With Inputs from Agencies)

U.S. banks have tightened their lending standards for both businesses and households in the second quarter of 2023, and they anticipate maintaining this cautious approach for the rest of the year, according to a survey conducted by the Federal Reserve and cited by Bloomberg.

U.S. banks have tightened their lending standards for both businesses and households in the second quarter of 2023, and they anticipate maintaining this cautious approach for the rest of the year, according to a survey conducted by the Federal Reserve and cited by Bloomberg. The survey of loan officers revealed a multitude of reasons behind this tightening, including a volatile economic outlook, declining credit quality in loan portfolios, concerns about bank funding costs, and deposit outflows. Federal Reserve Chairman Jerome Powell commented on the survey, acknowledging that the overall lending conditions are tight and continue to tighten. As a result of these conditions, the Fed took decisive action by raising interest rates to their highest level since March 2001. Factors at play Among the factors contributing to the banks' increased caution are worries about the potential impact of legislative, supervisory, or accounting changes. Recently, the Federal Reserve and other regulators proposed a 16 per cent aggregate increase in capital requirements for banks with assets exceeding $100 billion, aiming to strengthen lenders against potential future challenges. In response to the impending regulatory changes, some banks are already taking preventive measures, pulling back on lending or issuing warnings about potential future restrictions. The survey also revealed a decline in demand for new loans across various categories, affecting consumers, businesses, and commercial and residential real estate sectors. Throughout the year, growth in U.S. bank lending has slowed, coinciding with the Federal Reserve's aggressive campaign to combat inflation by raising interest rates and subsequently increasing borrowing costs. As a result, banks are setting aside more funds for future loan losses, signifying their apprehension about worsening credit conditions. Loan demand outlook in focus Despite the tightening lending landscape, JPMorgan Chase's Chief Financial Officer, Jeremy Barnum, expressed optimism about reasonably robust loan card growth, particularly in auto loans. However, he also stated that the outlook for loan demand in other areas, including consumer and wealth sectors, is not as promising. Slower bank lending can serve as a potential recession indicator, though it is not always definitive. According to Apollo's Chief Economist, Torsten Slok, the 'maximum negative impact' of tighter credit conditions on the gross domestic product (GDP) can take up to a year and a half to materialise. While the possibility of a recession was a concern, the latest data from the Bureau of Labour Statistics has shown that the U.S. economy grew faster in the second quarter compared to the first. As a result, the growing consensus suggests that the immediate threat of a recession is diminishing. Federal Reserve Chairman Jerome Powell echoed this sentiment, stating that the strong economic performance has instilled confidence in the country's economic outlook. Despite this optimism, the cautious approach taken by banks toward lending underscores the ongoing uncertainty surrounding the economic landscape. (With Inputs from Agencies)

Cash flow slowdown: U.S. banks turn cautious on lending in 2023

United States Fed chair Jerome Powell on Wednesday said that lending rate hikes may continue in the future but at a slower pace.&nbsp;

Powell made this statement while speaking at a Congressional hearing on financial services.

"Given how far we've come, it may make sense to move rates higher but to do so at a more moderate pace," Reuters quoted him as saying.&nbsp;

His comment comes a week after the US Fed voted to hold interest rates steady after 10 consecutive hikes since March 2022. The US central bank has raised its lending rate by five percentage points since last year.&nbsp;

In absolute terms, the lending rate has risen from close to zero to a range between 5.0 and 5.25 percent.

Powell called the Fed's decision to not raise the interest rates on June 14 as an "exercise in prudence". He added that the latest rate pause allows the Fed time to gather more information before deciding on further rate hike towards the end of the year.

Inflation remains a big issue

Despite the pause in the lending rate hike, Powell told the Congress that the Fed's fight against inflation has a "long way to go".&nbsp;Inflation continues to be well above the Fed's 2 percent&nbsp;target.

"Inflation has moderated somewhat since the middle of last year. Nonetheless, inflation pressures continue to run high," he told the House committee, as per a Reuters report.&nbsp;

As per reports, the US Fed's median inflation estimates have fallen to 3.2 percent, while core inflation, which excludes volatile food and energy prices, is expected to rise to 3.9 percent this year.

'US dollar remains safe'

The US Fed chief also waded into the ongoing debate on de-dollarisation - a term signifying countries switching to a currency other than the US dollar. He said that the US dollar will continue to be world's reserve currency.&nbsp;

"The status of the United States of the dollar as the world's reserve currency is a very important thing to us. I think the reason we have that status is largely due to our great democratic institutions, the rule of law, and the fact that we we have, generally speaking, had had strong levels of price stability," Reuters quoted him as saying.

&nbsp;

(With inputs from agencies)&nbsp;

United States Fed chair Jerome Powell on Wednesday said that lending rate hikes may continue in the future but at a slower pace. Powell made this statement while speaking at a Congressional hearing on financial services.

United States Fed chair Jerome Powell on Wednesday said that lending rate hikes may continue in the future but at a slower pace. Powell made this statement while speaking at a Congressional hearing on financial services. "Given how far we've come, it may make sense to move rates higher but to do so at a more moderate pace," Reuters quoted him as saying. His comment comes a week after the US Fed voted to hold interest rates steady after 10 consecutive hikes since March 2022. The US central bank has raised its lending rate by five percentage points since last year. In absolute terms, the lending rate has risen from close to zero to a range between 5.0 and 5.25 percent. Powell called the Fed's decision to not raise the interest rates on June 14 as an "exercise in prudence". He added that the latest rate pause allows the Fed time to gather more information before deciding on further rate hike towards the end of the year. Inflation remains a big issue Despite the pause in the lending rate hike, Powell told the Congress that the Fed's fight against inflation has a "long way to go". Inflation continues to be well above the Fed's 2 percent target. "Inflation has moderated somewhat since the middle of last year. Nonetheless, inflation pressures continue to run high," he told the House committee, as per a Reuters report. As per reports, the US Fed's median inflation estimates have fallen to 3.2 percent, while core inflation, which excludes volatile food and energy prices, is expected to rise to 3.9 percent this year. 'US dollar remains safe' The US Fed chief also waded into the ongoing debate on de-dollarisation - a term signifying countries switching to a currency other than the US dollar. He said that the US dollar will continue to be world's reserve currency. "The status of the United States of the dollar as the world's reserve currency is a very important thing to us. I think the reason we have that status is largely due to our great democratic institutions, the rule of law, and the fact that we we have, generally speaking, had had strong levels of price stability," Reuters quoted him as saying. (With inputs from agencies)

U.S. Fed chief Jerome Powell hints at future rate hikes

The head of the US central bank, Jerome Powell, was the subject of two Russian pranksters who pretended to be the president of Ukraine, Volodymyr Zelensky, on a phone call. The duo,&nbsp;who are supporters of Russian President Vladimir Putin, compelled the head of the Federal Reserve to speak on issues like inflation and how Russia managed its economy in the face of sanctions.

The Fed claimed that it appeared as though Powell's footage had been manipulated. Additionally, it was unable to verify the accuracy of the viral clips of the Fed chief.

According to a BBC report,&nbsp;Powell was heard praising Elvira Nabiullina, the head of Russia's central bank, for running the nation's economy in the face of Western sanctions, in one of the viral audio recordings that were widely circulated on Russian television.

Powell discussed a dramatic slowdown in US GDP in another video, which came after the Fed tried to control price increases.

“We would tell you that a recession is almost as likely as very slow growth,” Powell said of expectations for 2023.

“I think that is partly because of us having raised rates quite a bit but this is what it takes to get inflation down,” the Fed chairman said.

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RUSSIAN PRANK CALL THREAD w/Federal Reserve Chairman Jerome Powell - ALL 4 RELEASED PARTS: 
 
PART 1: The US economy, inflation &amp; at least 2 future interest rate hikes discussed! <a href="https://t.co/noIW0dQDxm">pic.twitter.com/noIW0dQDxm</a>
— Truth is Everything! (@_Tweets_Truth) <a href="https://twitter.com/_Tweets_Truth/status/1651619896407519232?ref_src=twsrc%5Etfw">April 27, 2023</a></blockquote>
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“Chair Powell participated in a conversation in January with someone who misrepresented himself as the Ukrainian president,” a Fed spokesperson said.

ALSO READ |<a href="https://www.wionews.com/world/biden-will-likely-die-republican-nikki-haley-makes-this-shocking-prediction-587345">&nbsp;'Biden will likely die...': Republican Nikki Haley makes this shocking prediction</a>

“It was a friendly conversation and took place in a context of our standing in support of the Ukrainian people in this challenging time. No sensitive or confidential information was discussed,” the spokesperson further said.

The Fed spokesperson added that “the matter has been referred to appropriate law enforcement, and out of respect for their efforts, we won’t be commenting further.”

Vladimir Kuznetsov and Alexei Stolyarov,&nbsp;known as Vovan and Lexus, were the pranksters who pretended to be Zelensky and spoke with Powell.

For many years, the pair has been successful in convincing foreign officials to speak with them. In 2018, the UK declared it thought the Kremlin was behind a prank call to Boris Johnson, who was the country's foreign secretary at the time.

ALSO WATCH |&nbsp;US, South Korea security pact will worsen situation, says Kim Jong Un's sister

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Vovan and Lexus frequently share footage of their practical jokes only for the purpose of embarrassing Western policymakers. They impersonated Zelenskyy once more in a conversation with Christine Lagarde, the head of the European Central Bank, earlier this year.

Additionally, they made a spoof call to former German Chancellor Angela Merkel, pretending to be the late Ukrainian President Petro Poroshenko.

They&nbsp;tricked&nbsp;Andrzej Duda, the president of Poland, into believing he was on call last year.

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The head of the US central bank, Jerome Powell, was the subject of two Russian pranksters who pretended to be the president of Ukraine, Volodymyr Zelensky, on a phone call.

The head of the US central bank, Jerome Powell, was the subject of two Russian pranksters who pretended to be the president of Ukraine, Volodymyr Zelensky, on a phone call. The duo, who are supporters of Russian President Vladimir Putin, compelled the head of the Federal Reserve to speak on issues like inflation and how Russia managed its economy in the face of sanctions. The Fed claimed that it appeared as though Powell's footage had been manipulated. Additionally, it was unable to verify the accuracy of the viral clips of the Fed chief. According to a BBC report, Powell was heard praising Elvira Nabiullina, the head of Russia's central bank, for running the nation's economy in the face of Western sanctions, in one of the viral audio recordings that were widely circulated on Russian television. Powell discussed a dramatic slowdown in US GDP in another video, which came after the Fed tried to control price increases. “We would tell you that a recession is almost as likely as very slow growth,” Powell said of expectations for 2023. “I think that is partly because of us having raised rates quite a bit but this is what it takes to get inflation down,” the Fed chairman said. RUSSIAN PRANK CALL THREAD w/Federal Reserve Chairman Jerome Powell - ALL 4 RELEASED PARTS: PART 1: The US economy, inflation & at least 2 future interest rate hikes discussed! pic.twitter.com/noIW0dQDxm — Truth is Everything! (@_Tweets_Truth) April 27, 2023 × “Chair Powell participated in a conversation in January with someone who misrepresented himself as the Ukrainian president,” a Fed spokesperson said. ALSO READ | 'Biden will likely die...': Republican Nikki Haley makes this shocking prediction “It was a friendly conversation and took place in a context of our standing in support of the Ukrainian people in this challenging time. No sensitive or confidential information was discussed,” the spokesperson further said. The Fed spokesperson added that “the matter has been referred to appropriate law enforcement, and out of respect for their efforts, we won’t be commenting further.” Vladimir Kuznetsov and Alexei Stolyarov, known as Vovan and Lexus, were the pranksters who pretended to be Zelensky and spoke with Powell. For many years, the pair has been successful in convincing foreign officials to speak with them. In 2018, the UK declared it thought the Kremlin was behind a prank call to Boris Johnson, who was the country's foreign secretary at the time. ALSO WATCH | US, South Korea security pact will worsen situation, says Kim Jong Un's sister Vovan and Lexus frequently share footage of their practical jokes only for the purpose of embarrassing Western policymakers. They impersonated Zelenskyy once more in a conversation with Christine Lagarde, the head of the European Central Bank, earlier this year. Additionally, they made a spoof call to former German Chancellor Angela Merkel, pretending to be the late Ukrainian President Petro Poroshenko. They tricked Andrzej Duda, the president of Poland, into believing he was on call last year. WATCH WION LIVE HERE:

WATCH: US Fed chair Jerome Powell pranked by Russian impersonators posing as Zelensky

The United States Federal Reserve following its last meeting of the year on Wednesday announced another interest rate hike, this time by half a percentage point making this its seventh time this year. Furthermore, the officials have also said that the central bank will deliver more interest rate hikes in 2023, in a bid to tame decade-high inflation in the country.&nbsp;

The interest rate, which is now at its highest in the last 15 years, seems to be reducing inflation to some degree as the US CPI data shows that the annual inflation has slowed down from 7.7 per cent in October to 7.1 per cent in November. However, Federal Reserve Chair Jerome Powell said that the recent slowing down has not been reassuring that the fight has been won.

Why is the Fed raising the interest rates?

When an economy is booming and inflation is on the rise, an increase in the interest rates slows everything down by making borrowing more expensive and&nbsp;discouraging consumers and businesses to spend more. This decrease in spending typically slows the economy and cools down inflation.&nbsp;

These hikes are also in line with the central bank’s goal to push inflation down to two per cent. So far, the Feds have been aggressively raising the interest rate as the country continues to battle high inflation, this time around, the&nbsp;benchmark was raised&nbsp;by half a point as opposed to the string of four straight three-quarter point hikes&nbsp;in the past couple of months.&nbsp;

ALSO READ |&nbsp;<a href="https://www.wionews.com/business-economy/us-federal-reserve-raises-interest-rate-by-075-again-in-a-bid-to-combat-inflation-530687">In a historic move, US Federal Reserve raises interest rate by 0.75% again</a>

Furthermore, the interest rate hike announced on Wednesday also marked the highest fed funds rate since December 2007 during the onset of the global financial crisis of 2008. However, this trend may continue for the upcoming year as it is projected that the rates would rise above five per cent by the end of next year, which is now somewhere between the 4.25 per cent to 4.5 per cent range.&nbsp;

What does it mean for American consumers?

The federal funds rate, set by the central bank, is the interest rate at which the commercial banks borrow and lend from one another overnight. Consequently, it directly or indirectly affects the borrowing costs for consumers and their earnings on savings accounts.&nbsp;

ALSO READ |&nbsp;<a href="https://www.wionews.com/business-economy/fed-lifts-benchmark-rate-by-half-percentage-point-543120">Fed lifts benchmark rate by half percentage point</a>

As of now, this leads many Americans to lean on credit as they are affected at a time when they are facing higher prices due to inflation as well as an unprecedented rise in interest rates which has not been witnessed in the past decade or so.

Notably, the Fed does not control all interest rates; rather it's a ripple effect, which begins with the central bank raising the interest rates and others following suit. Some of these interest rates affected include mortgages, credit cards, and other loans.&nbsp;

Chief financial analyst at Bankrate, Greg McBride, said, “Credit card rates are at a record high and still increasing. Auto loan rates are at an 11-year high. Home equity lines of credit are at a 15-year high. And online savings account and CD yields haven’t been this high since 2008.”&nbsp;

The New York-based consumer financial services firm, Bankrate also noted that the average credit card rate hit a record high of 19.40 per cent (as of December 7) which is up from 16.3 per cent since the beginning of the year. Consequently, with the recent hike consumers can also witness an increase in their credit card rates within a few statements.&nbsp;

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Therefore, McBride suggests transferring any balances on the credit cards to a zero-rate balance transfer card which locks in a zero rate between a year and 21 months, this would “insulate you from rate hikes” giving the consumer a “clear runway” to pay off their debt. He added, “Less debt and more savings will enable you to better weather rising interest rates, and is especially valuable if the economy sours.”

As for mortgages, the recent Fed hike would affect millions. Freddie Mac, an enterprise promoting home lending, said that with every percentage point increase in mortgage rates, which is eventually affected by the increase in the central bank’s benchmark rate, households which can afford a $400,000 mortgage decline by three to four million.&nbsp;

Furthermore, according to the federally funded company, the 30-year fixed-rate mortgage average was 6.33 per cent by the end of the second week of December which is more than double the same time last year, for the first time in US history. This comes as mortgage rates have been rising over the past year or so which has also affected at least 15 million potential homebuyers.&nbsp;

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The 30-year average at one point had peaked above seven per cent, however, the decrease is not enough to help buyer affordability, said McBride. Furthermore, with mortgage rates rising faster than home prices dropping, Americans will be forced to spend more which could add to the financial stress of high inflation, said a report by NBC. Therefore, with more hikes in the Fed interest rate on the horizon, mortgage rates may climb further.&nbsp;

How has the market reacted to the latest hike?

Interest rate hikes typically create volatility in the stock market and this time was no different. Following the announcement, the Dow Jones Industrial Average fell 142.29 points or 0.42 per cent, while S&amp;P 500 lost 24.33 points or 0.61 per cent and the Nasdaq Composite dropped 85.93 points, or 0.76 per cent, reported Reuters.&nbsp;

Notably, three major averages on Wall Street might witness a yearly decline for the first time since 2018 as well as their biggest annual percentage decline since the financial crisis of 2008. This comes as nearly all 11 major S&amp;P 500 sectors ended in negatives on Wednesday with healthcare being an exception, while financials were down 1.29 per cent making it the worst performing sector.&nbsp;

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Meanwhile, the condition of Asian stocks was no better, on Thursday, following the announcement and declines on Wall Street, Japan’s Nikkei dropped 0.42 per cent, while Australia’s S&amp;P/ASX 200 fell 0.62 per cent, Hong Kong’s Hang Seng witnessed a decline of 1.13 per cent and South Korea’s Kospi tumbled 1.32 per cent.&nbsp;

The decline has also been attributed to a rise in COVID-19 cases in China and crude oil’s downturn after strong gains a day prior. Additionally, while Beijing moves to open its economy after lifting its stringent zero-Covid restrictions, the slowed factory output and fewer retail sales in November continued to affect its outlook.&nbsp;

What has the Fed forecasted for the upcoming year?

On Wednesday, following the announcement of the interest rate hike, Powell also said that more interest rate hikes are on the horizon for the upcoming year while the US economy is in the midst of possibly slipping into recession. The Fed officials also projected a rise in the unemployment rate from the current 3.6 per cent to 4.6 per cent for the upcoming year. &nbsp;

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Currently, the rate of unemployment is increasing by 0.5 per cent annually and by the end of 2023, it would be well beyond what has historically been associated with recession. However, Powell has said that they don’t “talk about this kind of recession, that kind of a recession. We just make these forecasts.”

During the press conference, following the meeting of the Federal Reserve’s Federal Open Market Committee (FOMC), he also said that there is no “completely painless way to restore price stability” and they are doing the best they can. However, even with the recent aggressive hikes, inflation remains at least three times higher than their target and they speculate it will take at least three years for things to fall back.&nbsp;

ALSO WATCH |&nbsp;<a href="https://www.wionews.com/videos/fitch-inflation-and-fed-hikes-to-drive-us-economy-into-recession-526566">Fitch: Inflation and fed hikes to drive US economy into recession</a>

“The inflation data received so far in October and November show a welcome reduction in the pace of price increases, but it will take substantially more evidence to give confidence inflation is on a sustained downward path,” said Powell.&nbsp; 
 
(With inputs from agencies)&nbsp; 
 
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The United States Federal Reserve following its last meeting of the year on Wednesday announced another interest rate hike, this time by half a percentage point making this its seventh time this year.

The United States Federal Reserve following its last meeting of the year on Wednesday announced another interest rate hike, this time by half a percentage point making this its seventh time this year. Furthermore, the officials have also said that the central bank will deliver more interest rate hikes in 2023, in a bid to tame decade-high inflation in the country. The interest rate, which is now at its highest in the last 15 years, seems to be reducing inflation to some degree as the US CPI data shows that the annual inflation has slowed down from 7.7 per cent in October to 7.1 per cent in November. However, Federal Reserve Chair Jerome Powell said that the recent slowing down has not been reassuring that the fight has been won. Why is the Fed raising the interest rates? When an economy is booming and inflation is on the rise, an increase in the interest rates slows everything down by making borrowing more expensive and discouraging consumers and businesses to spend more. This decrease in spending typically slows the economy and cools down inflation. These hikes are also in line with the central bank’s goal to push inflation down to two per cent. So far, the Feds have been aggressively raising the interest rate as the country continues to battle high inflation, this time around, the benchmark was raised by half a point as opposed to the string of four straight three-quarter point hikes in the past couple of months. ALSO READ | In a historic move, US Federal Reserve raises interest rate by 0.75% again Furthermore, the interest rate hike announced on Wednesday also marked the highest fed funds rate since December 2007 during the onset of the global financial crisis of 2008. However, this trend may continue for the upcoming year as it is projected that the rates would rise above five per cent by the end of next year, which is now somewhere between the 4.25 per cent to 4.5 per cent range. What does it mean for American consumers? The federal funds rate, set by the central bank, is the interest rate at which the commercial banks borrow and lend from one another overnight. Consequently, it directly or indirectly affects the borrowing costs for consumers and their earnings on savings accounts. ALSO READ | Fed lifts benchmark rate by half percentage point As of now, this leads many Americans to lean on credit as they are affected at a time when they are facing higher prices due to inflation as well as an unprecedented rise in interest rates which has not been witnessed in the past decade or so. Notably, the Fed does not control all interest rates; rather it's a ripple effect, which begins with the central bank raising the interest rates and others following suit. Some of these interest rates affected include mortgages, credit cards, and other loans. Chief financial analyst at Bankrate, Greg McBride, said, “Credit card rates are at a record high and still increasing. Auto loan rates are at an 11-year high. Home equity lines of credit are at a 15-year high. And online savings account and CD yields haven’t been this high since 2008.” The New York-based consumer financial services firm, Bankrate also noted that the average credit card rate hit a record high of 19.40 per cent (as of December 7) which is up from 16.3 per cent since the beginning of the year. Consequently, with the recent hike consumers can also witness an increase in their credit card rates within a few statements. ALSO WATCH | World Business Watch: U.S. announces 7th interest rate hike of 2022 Therefore, McBride suggests transferring any balances on the credit cards to a zero-rate balance transfer card which locks in a zero rate between a year and 21 months, this would “insulate you from rate hikes” giving the consumer a “clear runway” to pay off their debt. He added, “Less debt and more savings will enable you to better weather rising interest rates, and is especially valuable if the economy sours.” As for mortgages, the recent Fed hike would affect millions. Freddie Mac, an enterprise promoting home lending, said that with every percentage point increase in mortgage rates, which is eventually affected by the increase in the central bank’s benchmark rate, households which can afford a $400,000 mortgage decline by three to four million. Furthermore, according to the federally funded company, the 30-year fixed-rate mortgage average was 6.33 per cent by the end of the second week of December which is more than double the same time last year, for the first time in US history. This comes as mortgage rates have been rising over the past year or so which has also affected at least 15 million potential homebuyers. ALSO READ | US securities regulator issues new guidelines for firms, makes cryptocurrency risk disclosure must The 30-year average at one point had peaked above seven per cent, however, the decrease is not enough to help buyer affordability, said McBride. Furthermore, with mortgage rates rising faster than home prices dropping, Americans will be forced to spend more which could add to the financial stress of high inflation, said a report by NBC. Therefore, with more hikes in the Fed interest rate on the horizon, mortgage rates may climb further. How has the market reacted to the latest hike? Interest rate hikes typically create volatility in the stock market and this time was no different. Following the announcement, the Dow Jones Industrial Average fell 142.29 points or 0.42 per cent, while S&P 500 lost 24.33 points or 0.61 per cent and the Nasdaq Composite dropped 85.93 points, or 0.76 per cent, reported Reuters. Notably, three major averages on Wall Street might witness a yearly decline for the first time since 2018 as well as their biggest annual percentage decline since the financial crisis of 2008. This comes as nearly all 11 major S&P 500 sectors ended in negatives on Wednesday with healthcare being an exception, while financials were down 1.29 per cent making it the worst performing sector. ALSO READ | Dollar gains broadly as upbeat US data muddles Fed rate hike views Meanwhile, the condition of Asian stocks was no better, on Thursday, following the announcement and declines on Wall Street, Japan’s Nikkei dropped 0.42 per cent, while Australia’s S&P/ASX 200 fell 0.62 per cent, Hong Kong’s Hang Seng witnessed a decline of 1.13 per cent and South Korea’s Kospi tumbled 1.32 per cent. The decline has also been attributed to a rise in COVID-19 cases in China and crude oil’s downturn after strong gains a day prior. Additionally, while Beijing moves to open its economy after lifting its stringent zero-Covid restrictions, the slowed factory output and fewer retail sales in November continued to affect its outlook. What has the Fed forecasted for the upcoming year? On Wednesday, following the announcement of the interest rate hike, Powell also said that more interest rate hikes are on the horizon for the upcoming year while the US economy is in the midst of possibly slipping into recession. The Fed officials also projected a rise in the unemployment rate from the current 3.6 per cent to 4.6 per cent for the upcoming year. ALSO READ | Poll shows that the US economy is headed for a shallow recession: Here’s what it means Currently, the rate of unemployment is increasing by 0.5 per cent annually and by the end of 2023, it would be well beyond what has historically been associated with recession. However, Powell has said that they don’t “talk about this kind of recession, that kind of a recession. We just make these forecasts.” During the press conference, following the meeting of the Federal Reserve’s Federal Open Market Committee (FOMC), he also said that there is no “completely painless way to restore price stability” and they are doing the best they can. However, even with the recent aggressive hikes, inflation remains at least three times higher than their target and they speculate it will take at least three years for things to fall back. ALSO WATCH | Fitch: Inflation and fed hikes to drive US economy into recession “The inflation data received so far in October and November show a welcome reduction in the pace of price increases, but it will take substantially more evidence to give confidence inflation is on a sustained downward path,” said Powell. (With inputs from agencies) WATCH WION LIVE HERE

US Federal Reserve raises interest rate for 7th time this year: Here’s what it means

Infusing hope in the economy, Federal Reserve chair Jerome Powell said Wednesday that the central bank could ease its pace of interest rate hikes "as soon as" December. Amid soaring prices, the Fed has taken several steps to tame inflation that has hit levels not seen since the 1980s.&nbsp; 
It has all the while tried to avoid pushing the United States into a recession.

"The time for moderating the pace of rate increases may come as soon as the December meeting" of Fed policymakers, Powell said in a speech at the Brookings Institution think tank.

Monetary policy affects the economy and inflation with "uncertain lags," he said. "Thus, it makes sense to moderate the pace of our rate increases as we approach the level of restraint that will be sufficient to bring inflation down."

Also Read |&nbsp;<a href="https://www.wionews.com/business-economy/feds-powell-says-higher-interest-rates-will-bring-down-inflation-but-also-inflict-pain-on-americans-510520">Powell says higher interest rates will bring down inflation, but also inflict 'pain' on Americans</a>

After Powell's announcement, the Nasdaq jumped three per cent. The Nasdaq Composite Index was up 2.9 per cent at 11,305.08 as Powell indicated that the Fed could soon shift from its ultra-aggressive response to inflation.&nbsp;&nbsp; &nbsp;

He also warned that its policy will likely have to remain tight "for some time" to restore price stability. He added that the Fed plans to "stay the course until the job is done," saying that loosening policy prematurely might lead to problems.

The central bank has raised the benchmark lending rate by 0.75 percentage points four consecutive times in recent months, out of six rate hikes this year in an aggressive effort to rein in prices.

The latest increase in November took the benchmark lending rate to 3.75-4.0 per cent, the highest since January 2008.

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The current picture suggests that there are early signs that prices are cooling. However, annual consumer inflation remained at 7.7 per cent in October.

Powell said Wednesday that inflation remains "far too high," and there is still a need to raise interest rates to a "sufficiently restrictive" level.

Powell also expressed hope of "a path to a soft or softish landing," referring to a scenario where unemployment rises but the country avoids a severe recession.

"I think that's very plausible," he said.

(With inputs from agencies)

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Infusing hope in the economy, Federal Reserve chair Jerome Powell said Wednesday that the central bank could ease its pace of interest rate hikes "as soon as" December.

Infusing hope in the economy, Federal Reserve chair Jerome Powell said Wednesday that the central bank could ease its pace of interest rate hikes "as soon as" December. Amid soaring prices, the Fed has taken several steps to tame inflation that has hit levels not seen since the 1980s. It has all the while tried to avoid pushing the United States into a recession. "The time for moderating the pace of rate increases may come as soon as the December meeting" of Fed policymakers, Powell said in a speech at the Brookings Institution think tank. Monetary policy affects the economy and inflation with "uncertain lags," he said. "Thus, it makes sense to moderate the pace of our rate increases as we approach the level of restraint that will be sufficient to bring inflation down." Also Read | Powell says higher interest rates will bring down inflation, but also inflict 'pain' on Americans After Powell's announcement, the Nasdaq jumped three per cent. The Nasdaq Composite Index was up 2.9 per cent at 11,305.08 as Powell indicated that the Fed could soon shift from its ultra-aggressive response to inflation. He also warned that its policy will likely have to remain tight "for some time" to restore price stability. He added that the Fed plans to "stay the course until the job is done," saying that loosening policy prematurely might lead to problems. The central bank has raised the benchmark lending rate by 0.75 percentage points four consecutive times in recent months, out of six rate hikes this year in an aggressive effort to rein in prices. The latest increase in November took the benchmark lending rate to 3.75-4.0 per cent, the highest since January 2008. × The current picture suggests that there are early signs that prices are cooling. However, annual consumer inflation remained at 7.7 per cent in October. Powell said Wednesday that inflation remains "far too high," and there is still a need to raise interest rates to a "sufficiently restrictive" level. Powell also expressed hope of "a path to a soft or softish landing," referring to a scenario where unemployment rises but the country avoids a severe recession. "I think that's very plausible," he said. (With inputs from agencies) WATCH WION LIVE HERE You can now write for wionews.com and be a part of the community. Share your stories and opinions with us here.

US Fed chief says interest rate hikes could ease 'as soon as December'

US Fed Chair Jerome Powell's speech at the Federal Reserve's annual forum has sent jitters to markets causing a crash. His announcement that interest rates would continue to rise and stay high cost America's richest people to lose close to 78 billion dollars.

US Fed Chief's speech causes market to crash

The fortunes of America’s richest people got slashed by $78 billion following Federal Reserve Chair Jerome Powell's speech.

During his speech, which was eight minutes long, Powell pointed out that the US central bank will keep raising interest rates and probably leave them elevated for a while to reduce inflation.

Powell, who was speaking at the Kansas City Fed’s annual policy forum in Jackson Hole, was seen pushing back on a recent rally in US stocks that was triggered by rumours that policymakers would soon reverse course from their aggressive monetary tightening.

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After an unprecedented run-up during the Covid-19 pandemic when interest rates were pinned near zero, Powell’s speech served as a reminder that valuations of giant technology companies remain high by historical standards.

Following Powell's speech, the S&amp;P 500 tumbled 3.4 per cent and the tech-heavy Nasdaq 100 plunged more than 4 per cent.

Not only this, billionaires such as Jeff Bezos, Elon Musk, Bill Gates, Warren Buffett and Bill Gates lost $6.8 billion, $5.5 billion, $2.7 billion and $2.2 billion respectively.

In the steepest six-month drop ever for the wealthiest people on the planet, the world’s 500 richest people lost $1.4 trillion in the first half of 2022.

Since November 2020, US stocks in July posted their strongest monthly advance leading investors to wager that the worst of the market rout was over.

(With inputs from agencies)

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The fortunes of America’s richest people got slashed by $78 billion following Federal Reserve Chair Jerome Powell's speech. During his speech, which was eight minutes long, Powell pointed out that the US central bank will keep raising interest rates and probably leave them elevated for a while to reduce inflation.

The fortunes of America’s richest people got slashed by $78 billion following Federal Reserve Chair Jerome Powell's speech. During his speech, which was eight minutes long, Powell pointed out that the US central bank will keep raising interest rates and probably leave them elevated for a while to reduce inflation. Powell, who was speaking at the Kansas City Fed’s annual policy forum in Jackson Hole, was seen pushing back on a recent rally in US stocks that was triggered by rumours that policymakers would soon reverse course from their aggressive monetary tightening. × After an unprecedented run-up during the Covid-19 pandemic when interest rates were pinned near zero, Powell’s speech served as a reminder that valuations of giant technology companies remain high by historical standards. Following Powell's speech, the S&P 500 tumbled 3.4 per cent and the tech-heavy Nasdaq 100 plunged more than 4 per cent. Not only this, billionaires such as Jeff Bezos, Elon Musk, Bill Gates, Warren Buffett and Bill Gates lost $6.8 billion, $5.5 billion, $2.7 billion and $2.2 billion respectively. In the steepest six-month drop ever for the wealthiest people on the planet, the world’s 500 richest people lost $1.4 trillion in the first half of 2022. Since November 2020, US stocks in July posted their strongest monthly advance leading investors to wager that the worst of the market rout was over. (With inputs from agencies) Watch WION's live TV here: ×

Fortunes of America’s richest people slashed by $78bn after Fed chief Powell's speech

When it comes to the economy, more is usually better.

Bigger job gains, faster wage growth and more consumer spending are all, in normal times, signs of a healthy economy. Growth might not be sufficient to ensure widespread prosperity, but it is necessary — making any loss of momentum a worrying sign that the economy could be losing steam or, worse, headed into a recession.

But these are not normal times. With nearly twice as many open jobs as available workers and companies struggling to meet record demand, many economists and policymakers argue that what the economy needs right now is not more, but less — less hiring, less wage growth and above all less inflation, which is running at its fastest pace in four decades.

Jerome Powell, the Federal Reserve chair, has called the labor market “unsustainably hot,” and the central bank is raising interest rates to try to cool it. President Joe Biden, who met with Powell on Tuesday, wrote in an opinion article this week in The Wall Street Journal that a slowdown in job creation “won’t be a cause for concern” but would rather be “a sign that we are successfully moving into the next phase of recovery.”

“We want a full and sustainable recovery,” said Claudia Sahm, a former Fed economist who has studied the government’s economic policy response to the pandemic. “The reason that we can’t take the victory lap right now on the recovery — the reason it is incomplete — is because inflation is too high.”

But a cooling economy carries its own risks. Despite inflation, the recovery from the pandemic recession has been among the strongest on record, with unemployment falling rapidly and incomes rebounding fastest for those at the bottom. If the recovery slows too much, it could undo much of that progress.

“That’s the needle we’re trying to thread right now,” said Harry Holzer, a Georgetown University economist. “We want to give up as few of the gains that we’ve made as possible.”

Economists disagree about the best way to strike that balance. Powell, after playing down inflation last year, now says reining it in is his top priority — and argues that the central bank can do so without cutting the recovery short. Some economists, particularly on the right, want the Fed to be more aggressive, even at the risk of causing a recession. Others, especially on the left, argue that inflation, while a problem, is a lesser evil than unemployment and that the Fed should therefore pursue a more cautious approach.

But where progressives and conservatives largely agree is that evaluating the economy will be particularly difficult over the next several months. Distinguishing a healthy cool-down from a worrying stall will require looking beyond the indicators that typically make headlines.

“It’s a very difficult time to interpret economic data and to even understand what’s happening with the economy,” said Michael Strain, an economist with the American Enterprise Institute. “We’re entering a period where there’s going to be tons of debate over whether we are in a recession right now.”

Slower job growth could be good (or bad).

The jobs report for May, which the Labor Department will release Friday, will provide a case study in the difficulty of interpreting economic data right now.

Ordinarily, one number from the monthly report — the overall jobs added or lost — is enough to signal the labor market’s health. That is because most of the time, the driving force in the labor market is demand. If business is strong, employers will want more workers, and job growth will accelerate. When demand lags, then hiring slows, layoffs mount and job growth stalls.

Now, though, the limiting factor in the labor market is not demand but supply. Employers are eager to hire: There were 11.4 million job openings at the end of April, close to a record. But there are roughly 500,000 fewer people either working or actively looking for work than when the pandemic began, leaving employers scrambling to fill available jobs.

The labor force has grown significantly this year, and forecasters expect more workers to return as the pandemic and the disruptions it caused continue to recede. But the pandemic may also have driven longer-lasting shifts in Americans’ work habits, and economists are not sure when or under what circumstances the labor force will make a complete rebound. Even then, there might not be enough workers to meet the extraordinarily high level of employer demand.

Most forecasters expect the report Friday to show that job growth slowed in May. But that number alone will not reveal whether the mismatch between supply and demand is easing. Slowing job growth coupled with a growing labor force could be a sign that the labor market is coming back into balance as demand cools and supply improves. But the same level of job growth without an increase in the supply of workers could indicate the opposite: that employers are having an even more difficult time finding the help they need.

Many economists say they will be watching the labor force participation rate — the share of the population either working or looking for work — just as closely as the headline job growth figures in coming months.

“One can unambiguously root for higher labor force participation,” said Jason Furman, a Harvard economist who was an adviser to President Barack Obama. “Beyond that, nothing else is unambiguous.”

Wage growth may need to slow.

Another number will be getting a lot of attention from economists, policymakers and investors: wage growth.

Employers have responded to the hot competition for workers exactly the way Econ 101 says they should: by raising pay. Average hourly earnings were up 5.5% in April from a year earlier, more than twice the rate they were rising before the pandemic.

Normally, faster wage growth would be good news. Persistently weak pay increases were a bleak hallmark of the long, slow recovery that followed the last recession. But even some economists who bemoaned those sluggish gains at the time say the current rate of wage growth is unsustainable.

“That’s something that we’re used to saying pretty unequivocally is good, but in this case, it just raises the risk that the economy is overheating further,” said Adam Ozimek, chief economist of the Economic Innovation Group, a Washington research organization. As long as wages are rising 5% or 6% per year, he said, it will be all but impossible to bring inflation down to the Fed’s 2% target.

Fed officials are watching closely for signs of a “wage-price spiral,” a self-reinforcing pattern in which workers expect inflation and therefore demand raises, leading employers to increase prices to compensate. Once such a cycle takes hold, it can be difficult to break — a prospect Powell has cited in explaining why the central bank has become more aggressive in fighting inflation.

“It’s a risk that we simply can’t run,” he said at a news conference last month. “We can’t allow a wage-price spiral to happen. And we can’t allow inflation expectations to become unanchored. It’s just something that we can’t allow to happen, and so we’ll look at it that way.”

Some economists, especially on the left, say there is little evidence that wage growth is feeding inflation, let alone that a wage-price spiral is developing. They contend that the recent pay gains reflect a rare moment of worker power in the labor market and that the Fed would be wrong to snuff it out.

But wages, on average, are not keeping up with inflation, meaning that many workers are losing ground despite the strong labor market. For workers to prosper, their wages need to be rising after adjusting for inflation — which almost certainly requires inflation to come down.

“What people are feeling is real,” said Darrick Hamilton, an economist at the New School in New York. “A wage increase that’s not as high as the increase in the price of milk does not make you better off.”

Hamilton argues that the Fed is right to try to rein in inflation but that it needs to design its policies with the recognition that it will be Black workers, along with other disadvantaged groups, who suffer most if the recovery falters. “The question that we should be asking is, who bears the burden” of the Fed’s policies, he said.

Keep an eye on job openings.

Historically, even small increases in the unemployment rate have almost always signaled the start of a recession. Should that relationship hold in the current environment, it suggests that if policymakers want to tame inflation without causing a downturn, they will have to find a way to cool off the labor market without causing a large number of layoffs.

Powell and other officials argue that is possible, partly because so many jobs are available right now. In a speech in Germany this week, Christopher Waller, a Fed governor, argued that as demand slows, employers are likely to start posting fewer jobs before they turn to layoffs. That could result in slower wage growth — since with fewer employers trying to hire, there will be less competition for workers — without a big increase in unemployment.

“I think there’s room right now for inflation to come down a significant amount without unemployment coming up,” said Mike Konczal, an economist at the Roosevelt Institute.

The Fed’s efforts to cool off the economy are already bearing fruit, Konczal said. Mortgage rates have risen sharply, and there are signs that the housing market is slowing as a result. The stock market has lost almost 15% of its value since the beginning of the year. That loss of wealth is likely to lead at least some consumers to pull back on their spending, which will lead to a pullback in hiring. Job openings fell in April, though they remained high, and wage growth has eased.

“There’s a lot of evidence to suggest the economy has already slowed down,” Konczal said. He said he was optimistic that the United States was on a path toward “normalizing to a regular good economy” instead of the boomlike one it has experienced over the past year.

But the thing about such a “soft landing,” as Fed officials call it, is that it is still a landing. Wage growth will be slower. Job opportunities will be fewer. Workers will have less leverage to demand flexible schedules or other perks. For the Fed, achieving that outcome without causing a recession would be a victory — but it might not feel like one to workers.

When it comes to the economy, more is usually better. Bigger job gains, faster wage growth and more consumer spending are all, in normal times, signs of a healthy economy.

When it comes to the economy, more is usually better. Bigger job gains, faster wage growth and more consumer spending are all, in normal times, signs of a healthy economy. Growth might not be sufficient to ensure widespread prosperity, but it is necessary — making any loss of momentum a worrying sign that the economy could be losing steam or, worse, headed into a recession. But these are not normal times. With nearly twice as many open jobs as available workers and companies struggling to meet record demand, many economists and policymakers argue that what the economy needs right now is not more, but less — less hiring, less wage growth and above all less inflation, which is running at its fastest pace in four decades. Jerome Powell, the Federal Reserve chair, has called the labor market “unsustainably hot,” and the central bank is raising interest rates to try to cool it. President Joe Biden, who met with Powell on Tuesday, wrote in an opinion article this week in The Wall Street Journal that a slowdown in job creation “won’t be a cause for concern” but would rather be “a sign that we are successfully moving into the next phase of recovery.” “We want a full and sustainable recovery,” said Claudia Sahm, a former Fed economist who has studied the government’s economic policy response to the pandemic. “The reason that we can’t take the victory lap right now on the recovery — the reason it is incomplete — is because inflation is too high.” But a cooling economy carries its own risks. Despite inflation, the recovery from the pandemic recession has been among the strongest on record, with unemployment falling rapidly and incomes rebounding fastest for those at the bottom. If the recovery slows too much, it could undo much of that progress. “That’s the needle we’re trying to thread right now,” said Harry Holzer, a Georgetown University economist. “We want to give up as few of the gains that we’ve made as possible.” Economists disagree about the best way to strike that balance. Powell, after playing down inflation last year, now says reining it in is his top priority — and argues that the central bank can do so without cutting the recovery short. Some economists, particularly on the right, want the Fed to be more aggressive, even at the risk of causing a recession. Others, especially on the left, argue that inflation, while a problem, is a lesser evil than unemployment and that the Fed should therefore pursue a more cautious approach. But where progressives and conservatives largely agree is that evaluating the economy will be particularly difficult over the next several months. Distinguishing a healthy cool-down from a worrying stall will require looking beyond the indicators that typically make headlines. “It’s a very difficult time to interpret economic data and to even understand what’s happening with the economy,” said Michael Strain, an economist with the American Enterprise Institute. “We’re entering a period where there’s going to be tons of debate over whether we are in a recession right now.” Slower job growth could be good (or bad). The jobs report for May, which the Labor Department will release Friday, will provide a case study in the difficulty of interpreting economic data right now. Ordinarily, one number from the monthly report — the overall jobs added or lost — is enough to signal the labor market’s health. That is because most of the time, the driving force in the labor market is demand. If business is strong, employers will want more workers, and job growth will accelerate. When demand lags, then hiring slows, layoffs mount and job growth stalls. Now, though, the limiting factor in the labor market is not demand but supply. Employers are eager to hire: There were 11.4 million job openings at the end of April, close to a record. But there are roughly 500,000 fewer people either working or actively looking for work than when the pandemic began, leaving employers scrambling to fill available jobs. The labor force has grown significantly this year, and forecasters expect more workers to return as the pandemic and the disruptions it caused continue to recede. But the pandemic may also have driven longer-lasting shifts in Americans’ work habits, and economists are not sure when or under what circumstances the labor force will make a complete rebound. Even then, there might not be enough workers to meet the extraordinarily high level of employer demand. Most forecasters expect the report Friday to show that job growth slowed in May. But that number alone will not reveal whether the mismatch between supply and demand is easing. Slowing job growth coupled with a growing labor force could be a sign that the labor market is coming back into balance as demand cools and supply improves. But the same level of job growth without an increase in the supply of workers could indicate the opposite: that employers are having an even more difficult time finding the help they need. Many economists say they will be watching the labor force participation rate — the share of the population either working or looking for work — just as closely as the headline job growth figures in coming months. “One can unambiguously root for higher labor force participation,” said Jason Furman, a Harvard economist who was an adviser to President Barack Obama. “Beyond that, nothing else is unambiguous.” Wage growth may need to slow. Another number will be getting a lot of attention from economists, policymakers and investors: wage growth. Employers have responded to the hot competition for workers exactly the way Econ 101 says they should: by raising pay. Average hourly earnings were up 5.5% in April from a year earlier, more than twice the rate they were rising before the pandemic. Normally, faster wage growth would be good news. Persistently weak pay increases were a bleak hallmark of the long, slow recovery that followed the last recession. But even some economists who bemoaned those sluggish gains at the time say the current rate of wage growth is unsustainable. “That’s something that we’re used to saying pretty unequivocally is good, but in this case, it just raises the risk that the economy is overheating further,” said Adam Ozimek, chief economist of the Economic Innovation Group, a Washington research organization. As long as wages are rising 5% or 6% per year, he said, it will be all but impossible to bring inflation down to the Fed’s 2% target. Fed officials are watching closely for signs of a “wage-price spiral,” a self-reinforcing pattern in which workers expect inflation and therefore demand raises, leading employers to increase prices to compensate. Once such a cycle takes hold, it can be difficult to break — a prospect Powell has cited in explaining why the central bank has become more aggressive in fighting inflation. “It’s a risk that we simply can’t run,” he said at a news conference last month. “We can’t allow a wage-price spiral to happen. And we can’t allow inflation expectations to become unanchored. It’s just something that we can’t allow to happen, and so we’ll look at it that way.” Some economists, especially on the left, say there is little evidence that wage growth is feeding inflation, let alone that a wage-price spiral is developing. They contend that the recent pay gains reflect a rare moment of worker power in the labor market and that the Fed would be wrong to snuff it out. But wages, on average, are not keeping up with inflation, meaning that many workers are losing ground despite the strong labor market. For workers to prosper, their wages need to be rising after adjusting for inflation — which almost certainly requires inflation to come down. “What people are feeling is real,” said Darrick Hamilton, an economist at the New School in New York. “A wage increase that’s not as high as the increase in the price of milk does not make you better off.” Hamilton argues that the Fed is right to try to rein in inflation but that it needs to design its policies with the recognition that it will be Black workers, along with other disadvantaged groups, who suffer most if the recovery falters. “The question that we should be asking is, who bears the burden” of the Fed’s policies, he said. Keep an eye on job openings. Historically, even small increases in the unemployment rate have almost always signaled the start of a recession. Should that relationship hold in the current environment, it suggests that if policymakers want to tame inflation without causing a downturn, they will have to find a way to cool off the labor market without causing a large number of layoffs. Powell and other officials argue that is possible, partly because so many jobs are available right now. In a speech in Germany this week, Christopher Waller, a Fed governor, argued that as demand slows, employers are likely to start posting fewer jobs before they turn to layoffs. That could result in slower wage growth — since with fewer employers trying to hire, there will be less competition for workers — without a big increase in unemployment. “I think there’s room right now for inflation to come down a significant amount without unemployment coming up,” said Mike Konczal, an economist at the Roosevelt Institute. The Fed’s efforts to cool off the economy are already bearing fruit, Konczal said. Mortgage rates have risen sharply, and there are signs that the housing market is slowing as a result. The stock market has lost almost 15% of its value since the beginning of the year. That loss of wealth is likely to lead at least some consumers to pull back on their spending, which will lead to a pullback in hiring. Job openings fell in April, though they remained high, and wage growth has eased. “There’s a lot of evidence to suggest the economy has already slowed down,” Konczal said. He said he was optimistic that the United States was on a path toward “normalizing to a regular good economy” instead of the boomlike one it has experienced over the past year. But the thing about such a “soft landing,” as Fed officials call it, is that it is still a landing. Wage growth will be slower. Job opportunities will be fewer. Workers will have less leverage to demand flexible schedules or other perks. For the Fed, achieving that outcome without causing a recession would be a victory — but it might not feel like one to workers.

Why a not-so-hot economy might be good news

It is easy to recall the 1980s as being a boom time for the United States economy — a time of gleaming excess that, among other things, powered Ronald Reagan to a landslide reelection in 1984.

But the decade didn’t start out quite so sunny. And understanding the history of how the economy went from bust to boom in the early 1980s offers a surprising model for optimism about how the U.S. economy could progress in the next couple of years.

All it would take is for the Federal Reserve to pull off a delicate economic pivot that is the mirror image of the one it managed four decades ago.

Now, high inflation and a seemingly never-ending pandemic are depressing Americans’ attitudes about the economy. By contrast, in December 1981 — when Reagan had been president for 11 months, just as President Joe Biden has now — conditions were by most measures substantially worse. The unemployment rate was 8.5% and would keep rising throughout 1982. Inflation was 8.9%, and indexes of consumer sentiment were abysmal.

In an issue of Time magazine published this month 40 years ago, if you flip past a cover story that ranks the performance of Reagan’s Cabinet and an advertisement pitching a Smith-Corona typewriter as a holiday gift for your child, you see just how bad the vibes were.

“Gathering Gloom for Workers,” goes the headline, reporting that “A spreading slump swells the long gray line of the unemployed.” The article said joblessness was so high in Detroit that community leaders “fear that they are sitting on a smoldering powder keg of urban unrest.”

If nothing else, this chronology is a reminder that conditions can change surprisingly quickly. By the time Reagan was reelected in 1984, the jobless rate was 7.2% and falling and inflation was down to 4.2%.

Some commentators have argued that Biden has the opportunity to be an inverse of Reagan politically (much of this commentary, it should be noted, came before Sen. Joe Manchin pulled his support from the president’s signature Build Back Better bill ). And there is of course no telling what the next three years will bring politically, regardless of what happens to the economy.

But in terms of the economic backdrop, it is important to understand the “why” of the Reagan economic reversal.

Those gloomy unemployment numbers in Reagan’s first two years were a consequence of aggressive tightening of monetary policy by Fed Chair Paul Volcker, who was aiming to end the high inflation of the 1970s.

Over the course of the previous decade, high inflation had come to seem inevitable. This led labor unions and individual workers to demand higher pay raises and made businesses willing to pay more and charge more for their products. This had settled into a vicious cycle, with deep social and political ramifications.

“Inflation wasn’t just an economic problem,” said Mike Konczal, director of macroeconomic analysis at the Roosevelt Institute. “It gave people the impression of a social and political breakdown, that the system was not working.”

Volcker wanted to break that psychology. He did it with steep interest rate increases that, in the service of inflation control, brought the worst downturn in five decades.

Across the government, including in the Reagan administration, there was a concerted focus on breaking inflation, even as the job market worsened. “What I find startling about this downturn is that so few politicians are calling for federal job training or the extension of unemployment benefits,” said Alan Greenspan, a former presidential adviser who would go on to succeed Volcker, in the 1981 Time article. “Five years ago, politicians would have been stumbling all over themselves to demand anti-recession spending.”

By late 1981, there were signs it was starting to work. That same article, for example, notes that Teamsters who had managed a 31.5% pay raise in 1979 promised to be “reasonable” in the next negotiations, and that employees at major airlines had agreed to a 10% wage reduction.

With this progress against inflation, Volcker was ready to relent and begin lowering interest rates. This enabled a speedy recovery from the recession, powering the Reagan boom and a period in which both unemployment and inflation were steadily falling.

As the Fed chair now, Jerome Powell has until recently faced the opposite problem.

For most of the 2010s, inflation was lower than the Fed aims for and the job market was persistently weak. And for the first nine months or so of the pandemic, too-low inflation and too few jobs appeared to be the predominant economic problem. Just one year ago, in December 2020, bond market prices implied that inflation would remain below the Fed’s 2% target for years to come, and the jobless rate was still 6.7%.

Powell and the Fed organized their strategy for monetary policy around building the Fed’s credibility that it would no longer allow a persistently too-low inflation and a too-weak job market. A new “flexible average inflation targeting” strategy introduced in 2020 was built on allowing inflation to sometimes overshoot 2%.

That, in turn, helps explain why the Fed has been slow to move toward tighter money this year, even as inflation soared and the job market recovered quickly. Only this month, after year-over-year inflation reached a whopping 6.8%, did Powell undertake a clear shift toward tighter money. He signaled the Fed would speed up the end of its bond-buying program and could begin raising interest rates in the first part of 2022.

Just as Volcker was willing to allow a recession to take hold to break the high-inflation cycle of the 1970s, Powell has, until recently, emphasized that an inflationary surge that started earlier this year was likely to be temporary and that the urgency of achieving full employment was paramount.

The Powell pivot to tighter money in 2021 is the equivalent of Volcker’s 1981 move: By then Volcker was ready to relent and, in effect, declare victory, cutting interest rates and setting the stage for the economy to recover. The signs that inflationary pressures were shifting downward was sufficiently compelling that the psychology had broken.

“It was a nasty, nasty fall, but Volcker stuck the landing to the point that many parts of the macroeconomic landscape could be changed and tilted toward prosperity and markets,” said Paul McCulley, an economist and senior fellow at Cornell Law School.

What would a full reverse Reagan economy look like over the next few years?

Over the course of 2022, inflation starts to fade. Consumers shift some of their spending back toward services and away from physical goods, corporate supply chain managers figure out how to adjust to whatever changes in demand prove permanent, and demand moderates as the Fed moves toward somewhat higher interest rates and Congress does not repeat its pandemic spending binge of the first half of 2021.

But, crucially, in the best-case scenario for Biden and the Democrats, the Fed doesn’t overdo it. Just as the Volcker Fed was able to achieve a simultaneous drop in unemployment and inflation in 1983 and 1984, the Powell Fed faces the delicate task of trying to bring down inflation while not acting so aggressively as to undermine further improvement in the job market.

The goal is to achieve something of a Goldilocks scenario for the economy by late 2022. In projections released this month, for example, the median Fed leader expected an unemployment rate of a mere 3.5% and 2.6% inflation in the final months of next year, with a strong labor market and gradually receding inflation continuing through 2024.

“If the Fed, through skill and fate and luck, gets this thing settled down in the next year or two, you can make a pretty strong case that the underlying progressive agenda, which is to deal with income and wealth inequality, could actually flourish,” said McCulley.

If that were to happen, it would be an economy in which the favorable aspects of the 2021 economy — workers empowered, wages rising, and so on — persist, while the high inflation that has overwhelmed those gains in the minds of many Americans fades.

It would be no easy task to achieve. History is littered with examples of the Fed raising interest rates to rein in inflation, only to cause a recession; indeed, it was a more common pattern than not in the decades immediately following World War II. In a pessimistic scenario, the inflationary forces that have taken hold will prove sufficiently profound that they won’t go away absent a recession.

But the experience of the 1980s shows that things can get better, and that the economic and political fortunes can change faster than it might seem in a gloomy December.

It is easy to recall the 1980s as being a boom time for the United States economy — a time of gleaming excess that, among other things, powered Ronald Reagan to a landslide reelection in 1984.

It is easy to recall the 1980s as being a boom time for the United States economy — a time of gleaming excess that, among other things, powered Ronald Reagan to a landslide reelection in 1984. But the decade didn’t start out quite so sunny. And understanding the history of how the economy went from bust to boom in the early 1980s offers a surprising model for optimism about how the U.S. economy could progress in the next couple of years. All it would take is for the Federal Reserve to pull off a delicate economic pivot that is the mirror image of the one it managed four decades ago. Now, high inflation and a seemingly never-ending pandemic are depressing Americans’ attitudes about the economy. By contrast, in December 1981 — when Reagan had been president for 11 months, just as President Joe Biden has now — conditions were by most measures substantially worse. The unemployment rate was 8.5% and would keep rising throughout 1982. Inflation was 8.9%, and indexes of consumer sentiment were abysmal. In an issue of Time magazine published this month 40 years ago, if you flip past a cover story that ranks the performance of Reagan’s Cabinet and an advertisement pitching a Smith-Corona typewriter as a holiday gift for your child, you see just how bad the vibes were. “Gathering Gloom for Workers,” goes the headline, reporting that “A spreading slump swells the long gray line of the unemployed.” The article said joblessness was so high in Detroit that community leaders “fear that they are sitting on a smoldering powder keg of urban unrest.” If nothing else, this chronology is a reminder that conditions can change surprisingly quickly. By the time Reagan was reelected in 1984, the jobless rate was 7.2% and falling and inflation was down to 4.2%. Some commentators have argued that Biden has the opportunity to be an inverse of Reagan politically (much of this commentary, it should be noted, came before Sen. Joe Manchin pulled his support from the president’s signature Build Back Better bill ). And there is of course no telling what the next three years will bring politically, regardless of what happens to the economy. But in terms of the economic backdrop, it is important to understand the “why” of the Reagan economic reversal. Those gloomy unemployment numbers in Reagan’s first two years were a consequence of aggressive tightening of monetary policy by Fed Chair Paul Volcker, who was aiming to end the high inflation of the 1970s. Over the course of the previous decade, high inflation had come to seem inevitable. This led labor unions and individual workers to demand higher pay raises and made businesses willing to pay more and charge more for their products. This had settled into a vicious cycle, with deep social and political ramifications. “Inflation wasn’t just an economic problem,” said Mike Konczal, director of macroeconomic analysis at the Roosevelt Institute. “It gave people the impression of a social and political breakdown, that the system was not working.” Volcker wanted to break that psychology. He did it with steep interest rate increases that, in the service of inflation control, brought the worst downturn in five decades. Across the government, including in the Reagan administration, there was a concerted focus on breaking inflation, even as the job market worsened. “What I find startling about this downturn is that so few politicians are calling for federal job training or the extension of unemployment benefits,” said Alan Greenspan, a former presidential adviser who would go on to succeed Volcker, in the 1981 Time article. “Five years ago, politicians would have been stumbling all over themselves to demand anti-recession spending.” By late 1981, there were signs it was starting to work. That same article, for example, notes that Teamsters who had managed a 31.5% pay raise in 1979 promised to be “reasonable” in the next negotiations, and that employees at major airlines had agreed to a 10% wage reduction. With this progress against inflation, Volcker was ready to relent and begin lowering interest rates. This enabled a speedy recovery from the recession, powering the Reagan boom and a period in which both unemployment and inflation were steadily falling. As the Fed chair now, Jerome Powell has until recently faced the opposite problem. For most of the 2010s, inflation was lower than the Fed aims for and the job market was persistently weak. And for the first nine months or so of the pandemic, too-low inflation and too few jobs appeared to be the predominant economic problem. Just one year ago, in December 2020, bond market prices implied that inflation would remain below the Fed’s 2% target for years to come, and the jobless rate was still 6.7%. Powell and the Fed organized their strategy for monetary policy around building the Fed’s credibility that it would no longer allow a persistently too-low inflation and a too-weak job market. A new “flexible average inflation targeting” strategy introduced in 2020 was built on allowing inflation to sometimes overshoot 2%. That, in turn, helps explain why the Fed has been slow to move toward tighter money this year, even as inflation soared and the job market recovered quickly. Only this month, after year-over-year inflation reached a whopping 6.8%, did Powell undertake a clear shift toward tighter money. He signaled the Fed would speed up the end of its bond-buying program and could begin raising interest rates in the first part of 2022. Just as Volcker was willing to allow a recession to take hold to break the high-inflation cycle of the 1970s, Powell has, until recently, emphasized that an inflationary surge that started earlier this year was likely to be temporary and that the urgency of achieving full employment was paramount. The Powell pivot to tighter money in 2021 is the equivalent of Volcker’s 1981 move: By then Volcker was ready to relent and, in effect, declare victory, cutting interest rates and setting the stage for the economy to recover. The signs that inflationary pressures were shifting downward was sufficiently compelling that the psychology had broken. “It was a nasty, nasty fall, but Volcker stuck the landing to the point that many parts of the macroeconomic landscape could be changed and tilted toward prosperity and markets,” said Paul McCulley, an economist and senior fellow at Cornell Law School. What would a full reverse Reagan economy look like over the next few years? Over the course of 2022, inflation starts to fade. Consumers shift some of their spending back toward services and away from physical goods, corporate supply chain managers figure out how to adjust to whatever changes in demand prove permanent, and demand moderates as the Fed moves toward somewhat higher interest rates and Congress does not repeat its pandemic spending binge of the first half of 2021. But, crucially, in the best-case scenario for Biden and the Democrats, the Fed doesn’t overdo it. Just as the Volcker Fed was able to achieve a simultaneous drop in unemployment and inflation in 1983 and 1984, the Powell Fed faces the delicate task of trying to bring down inflation while not acting so aggressively as to undermine further improvement in the job market. The goal is to achieve something of a Goldilocks scenario for the economy by late 2022. In projections released this month, for example, the median Fed leader expected an unemployment rate of a mere 3.5% and 2.6% inflation in the final months of next year, with a strong labor market and gradually receding inflation continuing through 2024. “If the Fed, through skill and fate and luck, gets this thing settled down in the next year or two, you can make a pretty strong case that the underlying progressive agenda, which is to deal with income and wealth inequality, could actually flourish,” said McCulley. If that were to happen, it would be an economy in which the favorable aspects of the 2021 economy — workers empowered, wages rising, and so on — persist, while the high inflation that has overwhelmed those gains in the minds of many Americans fades. It would be no easy task to achieve. History is littered with examples of the Fed raising interest rates to rein in inflation, only to cause a recession; indeed, it was a more common pattern than not in the decades immediately following World War II. In a pessimistic scenario, the inflationary forces that have taken hold will prove sufficiently profound that they won’t go away absent a recession. But the experience of the 1980s shows that things can get better, and that the economic and political fortunes can change faster than it might seem in a gloomy December.

How the 2020s economy could resemble the 1980s

President Joe Biden nominated Jerome Powell to serve a second term as chair of the US Federal Reserve, allowing him to lead the response to the economic damage caused by Covid-19 while dealing with a wave of record inflation.

Joe Biden: Jerome Powell 'right person' to lead federal reserve

The economy of United States continues to show 'sustained improvement' from the impact of the coronavirus pandemic and ongoing job market gains, but inflation has 'increased notably in recent months,' Federal Reserve Chair Jerome Powell said in prepared testimony for a congressional hearing.

Fed's Powell expects notable rise in inflation

It was once said that the governor of the Bank of England had the power to guide the behavior of Britain’s banks with the mere raise of an eyebrow. For the Federal Reserve in 2021, the equivalent may be Jerome Powell’s chuckle.

Powell, the Fed chair, was asked at a news conference Wednesday whether — in light of its forecast that the economy would recover quickly in the months ahead — it was time to “start talking about talking about” slowing the central bank’s buying of $80 billion in bonds each month.

He let out a half-laugh before answering, “Not yet.”

His dismissiveness at the idea that the Fed would even consider slowing its efforts to strengthen the economy was one of many chances he took in Wednesday’s session to convey one simple message: The central bank will not waver in its aggressive efforts to encourage growth until the economy is truly and unquestionably back to health.

It almost surely won’t be the last time he faces questions that second-guess that resolve.

If the economy evolves as Powell and most private forecasters think it will, a veritable boom will be underway later this year. As a result, he and his colleagues at the Fed would face a continuing test of their willingness to follow through on the approach they unanimously agreed to last summer. That new policy framework ended an era in which the Fed preemptively raised interest rates because falling unemployment risked future inflation.

Powell’s job Wednesday was to convince financial markets and everyone who makes economic decisions that the Fed was serious about this plan. That it won’t be swayed by all the things that, based on its history, might cause an increase in interest rates and choke off the expansion prematurely.

If prices for certain goods and services were to surge as the economy came back, it would, in this view, be a one-time bulge rather than a continuing rise in inflation to which the Fed might need to respond. The central bank’s officials now project 2.4% inflation this year, overshooting their 2% target, with a projected return to the target in 2022.

An old metaphor holds that the Fed’s job is to take away the punch bowl just as the party gets going. The official view of the central bank’s leaders now is that it has been an overly stingy host, taking away the punch bowl so quickly that parties were dreary, disappointing affairs.

The job now is to convince the world that it really will leave the punch bowl out long enough, and spiked adequately — that it will be a party worth attending. They insist punch bowl removal will be based on actual realized inebriation of the guests, not on forecasts of potential future problematic levels of drunkenness.

Powell’s dismissive chuckle was just one piece of the messaging. It was the prevailing idea that he returned to in multiple ways (emphasis added in these quotations):

“We will continue to provide the economy the support that it needs &lt;em&gt;for as long as it takes.”

“We’re not going to act preemptively based on forecasts for the most part, and we’re going to wait to see actual data. And I think it will take people time to adjust to that, and the only way we can really build the credibility of that is by doing it.”

“People start businesses, they reopen restaurants, the airlines will be flying again — all of those things will happen, and it will turn out to be a one-time bulge in prices, but it won’t change inflation going forward.”

He also played down the release of the Fed’s “dot-plot” of when to expect it to be time to raise rates. Four of 18 Fed officials thought that rate increases would be warranted by the end of 2022, and seven by the end of 2023. Powell emphasized that a comfortable majority envisioned no rate increases in the next three years.

The questions he faced from the press Wednesday were just the beginning of what figures to be a perennial topic whenever he or other leaders of the central bank face lawmakers, business leaders or the news media. The tone and details may vary but will all mean: “Are you sure&nbsp;you’re not going to start tightening the money supply?”

The questions might tie into inflationary pressures. For example, many conservatives have started to complain about rising gasoline prices. Based on the experience of past Fed leaders, Powell can expect plenty of questions about that in his next visit to Capitol Hill.

Or the questions could focus more on booming financial markets and whether the Fed needs to raise rates to rein in speculation.

Moreover, even if Powell sticks to the plan, the diffuse nature of power within the Federal Reserve System will make it easy for mixed messages to emerge. There are 12 presidents of regional Fed banks and seven governors in Washington (with one slot vacant). This means only a handful need to develop cold feet about the strategy — and start talking about it publicly — to cause markets and businesses to doubt the Fed’s commitment.

In many ways, it is the inverse of the situation that Paul Volcker faced as Fed leader in the early 1980s, as he engineered aggressive rate increases to curtail the high inflation of that era. To prevail, he had to resist pressure from fellow Fed appointees who had not fully bought into the strategy, even threatening to resign rather than lose a close vote.

The situation is certainly not that dramatic — yet — in 2021, given the unanimous vote on the new policy framework and the apparent strong majority on the committee who believe rates need to stay low.

But if history is a guide, and inflation trends and financial markets are as unpredictable in the months ahead as they have been in the recent past, it may take more than a laugh for Powell to dismiss questions from the tight-money crowd.

It was once said that the governor of the Bank of England had the power to guide the behavior of Britain’s banks with the mere raise of an eyebrow. For the Federal Reserve in 2021, the equivalent may be Jerome Powell’s chuckle.

It was once said that the governor of the Bank of England had the power to guide the behavior of Britain’s banks with the mere raise of an eyebrow. For the Federal Reserve in 2021, the equivalent may be Jerome Powell’s chuckle. Powell, the Fed chair, was asked at a news conference Wednesday whether — in light of its forecast that the economy would recover quickly in the months ahead — it was time to “start talking about talking about” slowing the central bank’s buying of $80 billion in bonds each month. He let out a half-laugh before answering, “Not yet.” His dismissiveness at the idea that the Fed would even consider slowing its efforts to strengthen the economy was one of many chances he took in Wednesday’s session to convey one simple message: The central bank will not waver in its aggressive efforts to encourage growth until the economy is truly and unquestionably back to health. It almost surely won’t be the last time he faces questions that second-guess that resolve. If the economy evolves as Powell and most private forecasters think it will, a veritable boom will be underway later this year. As a result, he and his colleagues at the Fed would face a continuing test of their willingness to follow through on the approach they unanimously agreed to last summer. That new policy framework ended an era in which the Fed preemptively raised interest rates because falling unemployment risked future inflation. Powell’s job Wednesday was to convince financial markets and everyone who makes economic decisions that the Fed was serious about this plan. That it won’t be swayed by all the things that, based on its history, might cause an increase in interest rates and choke off the expansion prematurely. If prices for certain goods and services were to surge as the economy came back, it would, in this view, be a one-time bulge rather than a continuing rise in inflation to which the Fed might need to respond. The central bank’s officials now project 2.4% inflation this year, overshooting their 2% target, with a projected return to the target in 2022. An old metaphor holds that the Fed’s job is to take away the punch bowl just as the party gets going. The official view of the central bank’s leaders now is that it has been an overly stingy host, taking away the punch bowl so quickly that parties were dreary, disappointing affairs. The job now is to convince the world that it really will leave the punch bowl out long enough, and spiked adequately — that it will be a party worth attending. They insist punch bowl removal will be based on actual realized inebriation of the guests, not on forecasts of potential future problematic levels of drunkenness. Powell’s dismissive chuckle was just one piece of the messaging. It was the prevailing idea that he returned to in multiple ways (emphasis added in these quotations): “We will continue to provide the economy the support that it needs for as long as it takes.” “We’re not going to act preemptively based on forecasts for the most part, and we’re going to wait to see actual data. And I think it will take people time to adjust to that, and the only way we can really build the credibility of that is by doing it.” “People start businesses, they reopen restaurants, the airlines will be flying again — all of those things will happen, and it will turn out to be a one-time bulge in prices, but it won’t change inflation going forward.” He also played down the release of the Fed’s “dot-plot” of when to expect it to be time to raise rates. Four of 18 Fed officials thought that rate increases would be warranted by the end of 2022, and seven by the end of 2023. Powell emphasized that a comfortable majority envisioned no rate increases in the next three years. The questions he faced from the press Wednesday were just the beginning of what figures to be a perennial topic whenever he or other leaders of the central bank face lawmakers, business leaders or the news media. The tone and details may vary but will all mean: “Are you sure you’re not going to start tightening the money supply?” The questions might tie into inflationary pressures. For example, many conservatives have started to complain about rising gasoline prices. Based on the experience of past Fed leaders, Powell can expect plenty of questions about that in his next visit to Capitol Hill. Or the questions could focus more on booming financial markets and whether the Fed needs to raise rates to rein in speculation. Moreover, even if Powell sticks to the plan, the diffuse nature of power within the Federal Reserve System will make it easy for mixed messages to emerge. There are 12 presidents of regional Fed banks and seven governors in Washington (with one slot vacant). This means only a handful need to develop cold feet about the strategy — and start talking about it publicly — to cause markets and businesses to doubt the Fed’s commitment. In many ways, it is the inverse of the situation that Paul Volcker faced as Fed leader in the early 1980s, as he engineered aggressive rate increases to curtail the high inflation of that era. To prevail, he had to resist pressure from fellow Fed appointees who had not fully bought into the strategy, even threatening to resign rather than lose a close vote. The situation is certainly not that dramatic — yet — in 2021, given the unanimous vote on the new policy framework and the apparent strong majority on the committee who believe rates need to stay low. But if history is a guide, and inflation trends and financial markets are as unpredictable in the months ahead as they have been in the recent past, it may take more than a laugh for Powell to dismiss questions from the tight-money crowd.

Jerome Powell promises not to take away the punch bowl

The US Federal Reserve cut interest rates again on Wednesday to help sustain a record-long economic expansion but signalled a higher bar to further reductions in borrowing costs, eliciting a fast and sharp rebuke from President Donald Trump.

Describing the US economic outlook as "favourable," Fed Chair Jerome Powell said the rate cut was designed "to provide insurance against ongoing risks" including weak global growth and resurgent trade tensions.

"If the economy does turn down, then a more extensive sequence of rate cuts could be appropriate," Powell said in a news conference after the Fed announced it had lowered its benchmark overnight lending rate by a quarter of a percentage point to a range of 1.75% to 2.00%. It was the second Fed rate cut this year.

But, Powell said, "what we think we are facing here is a situation which can be addressed, which should be addressed, with moderate adjustments to the federal funds rate," noting that the US&nbsp;labour market was strong and inflation was likely to return to the Fed's 2% annual goal.

"We are going to be highly data-dependent ... We are not on a pre-set course, we are going to be making decisions meeting by meeting," Powell said, adding that the Fed would stop cutting rates "when we think we've done enough."

Trump blasted Powell, saying the central bank chief had "No 'guts,' no sense, no vision!"

"A terrible communicator," Trump tweeted before Powell had even begun his news conference.

Later, Trump told reporters during a trip to California: "I think it's fine. I think that frankly they should have acted faster."

Underscoring divisions within the central bank, the quarter-point rate cut on Wednesday drew dissents from three of the 10 voting policymakers.

Kansas City Fed President Esther George and Boston Fed President Eric Rosengren called for no rate cut, and St. Louis Fed President James Bullard wanted a bigger half-point rate cut.

Forecasts from all 17 policymakers released at the end of the meeting showed even broader disagreement, with seven expecting a third rate cut this year, five seeing the current rate cut as the last for 2019, and five who appeared to have been against even Wednesday's move.

Technical adjustments

The central bank also widened the gap between the interest it pays banks on excess reserves and the top of its policy rate range, a step taken to smooth out problems in money markets that prompted a market intervention by the New York Fed this week.

In a hint that the Fed may soon take bigger steps, Powell acknowledged that strains in funding markets had been bigger than expected, and he said the central bank may need to resume increases to the Fed's balance sheet "earlier" than previously thought.

US stocks, lower ahead of the statement, extended their losses and the US Treasury yield curve flattened. The 10-year Treasury note yield inched up to 1.79%.

The dollar gained ground against the euro and yen.

"Another rate cut from the Fed to try to shield the US economy from global headwinds," said Joe Manimbo, senior market analyst at Western Union Business Solutions in Washington. "Today’s move was more of a hawkish easing in that the Fed’s median forecasts for rates suggested no more cuts this year, while some officials dissented."

Still, traders of interest rate futures were betting on one more quarter-point rate cut this year.

New projections showed Fed policymakers at the median expected rates to stay within the new range through 2020.

"There is a lot of uncertainty" around rate-path views and the economic outlook, Powell said.

There was little change in policymakers' projections for the economy, with GDP growth seen at a slightly higher 2.2% this year and the unemployment rate to be 3.7% through 2020. Inflation is projected to be 1.5% for the year, below the Fed's 2% target, before rising to 1.9% next year.

The Fed also cut rates in July, the first such move since 2008, as it responded to risks from Trump's trade war with China and other overseas developments.

The US Federal Reserve cut interest rates again on Wednesday to help sustain a record-long economic expansion but signalled a higher bar to further reductions in borrowing costs, eliciting a fast and sharp rebuke from President Donald Trump.

The US Federal Reserve cut interest rates again on Wednesday to help sustain a record-long economic expansion but signalled a higher bar to further reductions in borrowing costs, eliciting a fast and sharp rebuke from President Donald Trump. Describing the US economic outlook as "favourable," Fed Chair Jerome Powell said the rate cut was designed "to provide insurance against ongoing risks" including weak global growth and resurgent trade tensions. "If the economy does turn down, then a more extensive sequence of rate cuts could be appropriate," Powell said in a news conference after the Fed announced it had lowered its benchmark overnight lending rate by a quarter of a percentage point to a range of 1.75% to 2.00%. It was the second Fed rate cut this year. But, Powell said, "what we think we are facing here is a situation which can be addressed, which should be addressed, with moderate adjustments to the federal funds rate," noting that the US labour market was strong and inflation was likely to return to the Fed's 2% annual goal. "We are going to be highly data-dependent ... We are not on a pre-set course, we are going to be making decisions meeting by meeting," Powell said, adding that the Fed would stop cutting rates "when we think we've done enough." Trump blasted Powell, saying the central bank chief had "No 'guts,' no sense, no vision!" "A terrible communicator," Trump tweeted before Powell had even begun his news conference. Later, Trump told reporters during a trip to California: "I think it's fine. I think that frankly they should have acted faster." Underscoring divisions within the central bank, the quarter-point rate cut on Wednesday drew dissents from three of the 10 voting policymakers. Kansas City Fed President Esther George and Boston Fed President Eric Rosengren called for no rate cut, and St. Louis Fed President James Bullard wanted a bigger half-point rate cut. Forecasts from all 17 policymakers released at the end of the meeting showed even broader disagreement, with seven expecting a third rate cut this year, five seeing the current rate cut as the last for 2019, and five who appeared to have been against even Wednesday's move. Technical adjustments The central bank also widened the gap between the interest it pays banks on excess reserves and the top of its policy rate range, a step taken to smooth out problems in money markets that prompted a market intervention by the New York Fed this week. In a hint that the Fed may soon take bigger steps, Powell acknowledged that strains in funding markets had been bigger than expected, and he said the central bank may need to resume increases to the Fed's balance sheet "earlier" than previously thought. US stocks, lower ahead of the statement, extended their losses and the US Treasury yield curve flattened. The 10-year Treasury note yield inched up to 1.79%. The dollar gained ground against the euro and yen. "Another rate cut from the Fed to try to shield the US economy from global headwinds," said Joe Manimbo, senior market analyst at Western Union Business Solutions in Washington. "Today’s move was more of a hawkish easing in that the Fed’s median forecasts for rates suggested no more cuts this year, while some officials dissented." Still, traders of interest rate futures were betting on one more quarter-point rate cut this year. New projections showed Fed policymakers at the median expected rates to stay within the new range through 2020. "There is a lot of uncertainty" around rate-path views and the economic outlook, Powell said. There was little change in policymakers' projections for the economy, with GDP growth seen at a slightly higher 2.2% this year and the unemployment rate to be 3.7% through 2020. Inflation is projected to be 1.5% for the year, below the Fed's 2% target, before rising to 1.9% next year. The Fed also cut rates in July, the first such move since 2008, as it responded to risks from Trump's trade war with China and other overseas developments.

US Federal Reserve cuts interest rates, signals holding pattern for now

With US-China trade tensions roiling markets, investors are counting on support for stocks coming from a Federal Reserve willing to keep cutting interest rates to help the US economy avoid a severe downturn.

A quarter-point rate reduction is widely expected when the Fed issues its next policy statement on Wednesday, which would be the central bank's second such cut after lowering rates in July for the first time since 2008. That puts the greater focus on clues about how much further the Fed will go.

“If the Fed gives forward guidance that suggests less than what the market is thinking, then you will probably see markets sell-off," said Jamie Cox, managing partner of Harris Financial Group in Richmond, Virginia. "So long as the Fed plays along with what markets are pricing in think markets will be very stable.”

The Fed's 180-degree pivot from tightening monetary policy last year to easing it has helped drive the stock market's overall strong performance in 2019. The benchmark S&amp;P 500 has climbed 20 per cent this year and is near all-time highs.

The central bank in July cited signs of a global slowdown, simmering US-China trade tensions and a desire to boost too-low inflation as it lowered borrowing costs.

Markets are pricing in a near 90 per cent probability that the Fed will shave another quarter-point from its current overnight lending rate of 2.00 per cent to 2.25 per cent, according to the CME Group's FedWatch tool. There is a roughly 65 per cent probability that the Fed makes at least one more quarter-point cut by the end of the year, according to FedWatch.

"The market is going to want to see a focus that we have a cut and there is likely more coming," said Keith Lerner, chief market strategist at SunTrust Advisory Services in Atlanta. "They want to know that the Fed is vigilant and will act aggressively if needed."

That raises the importance of the newest set of policymakers' rate-path projections - the so-called dot plot - that will be released along with the rate decision. UBS economists said in a note they expect that will shift lower overall for 2019, but project only two cuts total for the year, which could irk both investors and a <a href="https://www.wionews.com/world/turkeys-erdogan-to-discuss-with-trump-buying-us-patriot-missiles-249560">US president</a> eager for a more aggressive posture.

President Donald Trump has frequently criticized the Fed for not cutting rates more swiftly and significantly, with the Fed chair he appointed, Jerome Powell, the primary target of his ire.

The European Central Bank's decision on Thursday to cut interest rates and restart a larger stimulus program could further pressure the Fed to cut rates, as the ECB's move stands to weaken the euro against the dollar and thereby drive up the price of US exports - an issue that especially vexes Trump.

Powell, who will give a news conference after the central bank issues its statement, has made comments in the past that have shaken the market, including in July, when he said the bank's rate cut might not be the start of a lengthy easing campaign to shore up the economy.

"Every meeting has the ability for Jay Powell to say something that upsets markets a little bit,” said Arthur Hogan, chief market strategist at National Securities Corp.

Powell "has had enough practice to know that he does not want to move markets or make news,” he added.

Of the past eight easing cycles since 1981, four have been "insurance" cycles, when economic problems loom but the economy is not in a recession, while four were pre-recession cycles, according to research from Allianz Global Investors.

One year into an easing cycle, the S&amp;P 500 rose an average of 20.4 per cent during insurance cycles, while the index fell an average of 10.2 per cent during pre-recession cycles, according to Allianz.

"Historically, what they’re doing now, which is cutting rates in an economy that is not in a recession and not really in any imminent risk of a recession, has been positive for the stock market," said Mona Mahajan, US investment strategist at Allianz.

The stock market overall has typically responded well to a second rate cut, which Wednesday's would be, with the Dow Jones Industrial Average rising an average of 20.3 per cent one year later, according to Ned Davis Research. The weakest performance has come when the Fed tried and failed to prevent a recession.

The probability of a recession in the next 12 months is nearly 38 per cent, its highest in about a decade, according to the New York Fed's recession indicator, which is based on the US Treasury yield curve. Last month, yields on two-year US bonds exceeded those on 10-year notes, an inversion of the yield curve that is seen as an omen of recession.

An escalation in the US-China tariff war is contributing to economic uncertainty and is top among concerns for stock investors. Late last month, a key speech from Powell was upstaged when Trump issued tweets that heightened trade tensions.

“I do think it’s important that the Fed helps ease financial conditions and helps reduce the probability of recession," SunTrust's Lerner said. "If the tariff fight ratchets up more, then what the Fed does, the effect will be less.

With US-China trade tensions roiling markets, investors are counting on support for stocks coming from a Federal Reserve willing to keep cutting interest rates to help the US economy avoid a severe downturn.

With US-China trade tensions roiling markets, investors are counting on support for stocks coming from a Federal Reserve willing to keep cutting interest rates to help the US economy avoid a severe downturn. A quarter-point rate reduction is widely expected when the Fed issues its next policy statement on Wednesday, which would be the central bank's second such cut after lowering rates in July for the first time since 2008. That puts the greater focus on clues about how much further the Fed will go. “If the Fed gives forward guidance that suggests less than what the market is thinking, then you will probably see markets sell-off," said Jamie Cox, managing partner of Harris Financial Group in Richmond, Virginia. "So long as the Fed plays along with what markets are pricing in think markets will be very stable.” The Fed's 180-degree pivot from tightening monetary policy last year to easing it has helped drive the stock market's overall strong performance in 2019. The benchmark S&P 500 has climbed 20 per cent this year and is near all-time highs. The central bank in July cited signs of a global slowdown, simmering US-China trade tensions and a desire to boost too-low inflation as it lowered borrowing costs. Markets are pricing in a near 90 per cent probability that the Fed will shave another quarter-point from its current overnight lending rate of 2.00 per cent to 2.25 per cent, according to the CME Group's FedWatch tool. There is a roughly 65 per cent probability that the Fed makes at least one more quarter-point cut by the end of the year, according to FedWatch. "The market is going to want to see a focus that we have a cut and there is likely more coming," said Keith Lerner, chief market strategist at SunTrust Advisory Services in Atlanta. "They want to know that the Fed is vigilant and will act aggressively if needed." That raises the importance of the newest set of policymakers' rate-path projections - the so-called dot plot - that will be released along with the rate decision. UBS economists said in a note they expect that will shift lower overall for 2019, but project only two cuts total for the year, which could irk both investors and a US president eager for a more aggressive posture. President Donald Trump has frequently criticized the Fed for not cutting rates more swiftly and significantly, with the Fed chair he appointed, Jerome Powell, the primary target of his ire. The European Central Bank's decision on Thursday to cut interest rates and restart a larger stimulus program could further pressure the Fed to cut rates, as the ECB's move stands to weaken the euro against the dollar and thereby drive up the price of US exports - an issue that especially vexes Trump. Powell, who will give a news conference after the central bank issues its statement, has made comments in the past that have shaken the market, including in July, when he said the bank's rate cut might not be the start of a lengthy easing campaign to shore up the economy. "Every meeting has the ability for Jay Powell to say something that upsets markets a little bit,” said Arthur Hogan, chief market strategist at National Securities Corp. Powell "has had enough practice to know that he does not want to move markets or make news,” he added. Of the past eight easing cycles since 1981, four have been "insurance" cycles, when economic problems loom but the economy is not in a recession, while four were pre-recession cycles, according to research from Allianz Global Investors. One year into an easing cycle, the S&P 500 rose an average of 20.4 per cent during insurance cycles, while the index fell an average of 10.2 per cent during pre-recession cycles, according to Allianz. "Historically, what they’re doing now, which is cutting rates in an economy that is not in a recession and not really in any imminent risk of a recession, has been positive for the stock market," said Mona Mahajan, US investment strategist at Allianz. The stock market overall has typically responded well to a second rate cut, which Wednesday's would be, with the Dow Jones Industrial Average rising an average of 20.3 per cent one year later, according to Ned Davis Research. The weakest performance has come when the Fed tried and failed to prevent a recession. The probability of a recession in the next 12 months is nearly 38 per cent, its highest in about a decade, according to the New York Fed's recession indicator, which is based on the US Treasury yield curve. Last month, yields on two-year US bonds exceeded those on 10-year notes, an inversion of the yield curve that is seen as an omen of recession. An escalation in the US-China tariff war is contributing to economic uncertainty and is top among concerns for stock investors. Late last month, a key speech from Powell was upstaged when Trump issued tweets that heightened trade tensions. “I do think it’s important that the Fed helps ease financial conditions and helps reduce the probability of recession," SunTrust's Lerner said. "If the tariff fight ratchets up more, then what the Fed does, the effect will be less.

Wall Street Week Ahead: With rate cut likely, market wonders how low Fed will go

Asian shares sank on Monday as the latest salvo in the Sino-US&nbsp;trade war shook confidence in the world economy and sent investors steaming to the safe harbours of sovereign bonds and gold, while slugging emerging market currencies.

Yields on benchmark 10-year Treasury debt dropped to their lowest since mid-2016, while gold hit its highest since April 2013 as risk was shunned.

There was some relief that China fixed the yuan's midpoint at a relatively steady 7.0570 per dollar when it had been trading as weak as 7.1850 offshore, countering concerns Beijing would let the currency slide to keep exports competitive.

MSCI's broadest index of Asia-Pacific shares outside Japan still shed 2.0%, and Australia 1.5%.

Japan's Nikkei lost 2.3%, while Shanghai blue chips fell 1.2%. E-Mini futures for the S&amp;P 500 eased 0.8%, and EUROSTOXX 50 futures 1.1%.

Wall Street nose-dived on Friday when President Donald Trump announced a 5% additional duty on $550 billion in targeted Chinese goods, hours after China unveiled retaliatory tariffs on $75 billion worth of US products.

At the G7 meeting in France over the weekend, Trump caused some confusion by indicating he may have had second thoughts on the tariffs.

But the White House said on Sunday that Trump wished he had raised tariffs on Chinese goods even higher last week, even as he signalled he did not plan to follow through with a demand that US&nbsp;firms close operations in China.

Trump is now set to hold a joint news conference with French President Emmanuel Macron later on Monday.

"There is an uneasy feeling that the very fragile negotiations are spiralling out of control," wrote analysts at ANZ in a note.

"The escalation suggests uncertainty will continue to weigh on global trade, industrial production and investment, with no sign of a resolution."

The latest broadside overshadowed a pledge by Federal Reserve Chair Jerome Powell to "act as appropriate" to keep the US economy healthy, although he stopped short of committing to rapid-fire rate cuts.

The markets clearly believe, however, the Fed will have to act aggressively and are fully priced for at least a quarter-point cut in September and more than 110 basis points of easing by the end of 2020.

"Trump shows no signs of moderating his destructive trade policies," said JPMorgan analyst Adam Crisafulli.

"Central banks can't fully ameliorate the downside of a global trade war," he added. "Companies will enter lockdown mode in terms of spending, and eventually hiring, until at least the November 2020 election amid all the uncertainty."

Yields race lower

Yields on 10-year Treasury notes were down at 1.48%, having dived from a top of 1.66% on Friday, leaving them almost matching two-year yields.

"We continue to remain long 10's, targeting 1.3% due to a combination of weakness in the global economy and trade war uncertainty filtering through into a weaker US economy," said Priya Misra, head of global rates strategy at TD Securities.

"This will force the Fed to ease beyond a 'mid-cycle adjustment to policy'," he added. "We believe that the market is underpricing the risks of additional rate cuts in 2020."

The drop in yields initially swept the legs out from under the dollar, which slid 0.5% on Friday against a basket of currencies and was last trading at 97.654.

It took an early hit on the yen to touch 104.47, but pared the losses as the session wore on and was last at 105.21. The next major chart point is a low around 104.10 briefly touched during the "flash crash" of early January.

The euro was firm at $1.1143, having climbed 0.6% on Friday, although restrained somewhat by speculation the European Central Bank will also have to ease aggressively next month.

The dollar fared better elsewhere, making inroads on most emerging market currencies. The Turkish lira briefly tumbled as far as 6.4700 per dollar at one stage.

Spot gold got a boost from the slide in yields, rising 1.1% to $1,544.23 per ounce and touching its highest since April 2013.

Oil prices went the other way on worries the tariffs dispute would crimp world demand.

Brent crude futures slid 68 cents to $58.66, while US crude lost 79 cents to $53.38 a barrel.

Asian shares sank on Monday as the latest salvo in the Sino-US trade war shook confidence in the world economy and sent investors steaming to the safe harbours of sovereign bonds and gold, while slugging emerging market currencies.

Asian shares sank on Monday as the latest salvo in the Sino-US trade war shook confidence in the world economy and sent investors steaming to the safe harbours of sovereign bonds and gold, while slugging emerging market currencies. Yields on benchmark 10-year Treasury debt dropped to their lowest since mid-2016, while gold hit its highest since April 2013 as risk was shunned. There was some relief that China fixed the yuan's midpoint at a relatively steady 7.0570 per dollar when it had been trading as weak as 7.1850 offshore, countering concerns Beijing would let the currency slide to keep exports competitive. MSCI's broadest index of Asia-Pacific shares outside Japan still shed 2.0%, and Australia 1.5%. Japan's Nikkei lost 2.3%, while Shanghai blue chips fell 1.2%. E-Mini futures for the S&P 500 eased 0.8%, and EUROSTOXX 50 futures 1.1%. Wall Street nose-dived on Friday when President Donald Trump announced a 5% additional duty on $550 billion in targeted Chinese goods, hours after China unveiled retaliatory tariffs on $75 billion worth of US products. At the G7 meeting in France over the weekend, Trump caused some confusion by indicating he may have had second thoughts on the tariffs. But the White House said on Sunday that Trump wished he had raised tariffs on Chinese goods even higher last week, even as he signalled he did not plan to follow through with a demand that US firms close operations in China. Trump is now set to hold a joint news conference with French President Emmanuel Macron later on Monday. "There is an uneasy feeling that the very fragile negotiations are spiralling out of control," wrote analysts at ANZ in a note. "The escalation suggests uncertainty will continue to weigh on global trade, industrial production and investment, with no sign of a resolution." The latest broadside overshadowed a pledge by Federal Reserve Chair Jerome Powell to "act as appropriate" to keep the US economy healthy, although he stopped short of committing to rapid-fire rate cuts. The markets clearly believe, however, the Fed will have to act aggressively and are fully priced for at least a quarter-point cut in September and more than 110 basis points of easing by the end of 2020. "Trump shows no signs of moderating his destructive trade policies," said JPMorgan analyst Adam Crisafulli. "Central banks can't fully ameliorate the downside of a global trade war," he added. "Companies will enter lockdown mode in terms of spending, and eventually hiring, until at least the November 2020 election amid all the uncertainty." Yields race lower Yields on 10-year Treasury notes were down at 1.48%, having dived from a top of 1.66% on Friday, leaving them almost matching two-year yields. "We continue to remain long 10's, targeting 1.3% due to a combination of weakness in the global economy and trade war uncertainty filtering through into a weaker US economy," said Priya Misra, head of global rates strategy at TD Securities. "This will force the Fed to ease beyond a 'mid-cycle adjustment to policy'," he added. "We believe that the market is underpricing the risks of additional rate cuts in 2020." The drop in yields initially swept the legs out from under the dollar, which slid 0.5% on Friday against a basket of currencies and was last trading at 97.654. It took an early hit on the yen to touch 104.47, but pared the losses as the session wore on and was last at 105.21. The next major chart point is a low around 104.10 briefly touched during the "flash crash" of early January. The euro was firm at $1.1143, having climbed 0.6% on Friday, although restrained somewhat by speculation the European Central Bank will also have to ease aggressively next month. The dollar fared better elsewhere, making inroads on most emerging market currencies. The Turkish lira briefly tumbled as far as 6.4700 per dollar at one stage. Spot gold got a boost from the slide in yields, rising 1.1% to $1,544.23 per ounce and touching its highest since April 2013. Oil prices went the other way on worries the tariffs dispute would crimp world demand. Brent crude futures slid 68 cents to $58.66, while US crude lost 79 cents to $53.38 a barrel.

Asian shares slugged, bonds bought amid trade gloom

Oil prices clawed back the previous day's losses on Friday, with Brent nudging above $60 a barrel, as tighter supplies from key producers offset slowing demand growth while investors await clues from the Federal Reserve on US monetary policy.

Brent crude rose 10 cents to $60.02 a barrel by 0118 GMT, while US crude futures were at $55.38 a barrel, up 3 cents. Both contracts were on track for a second weekly gain.

"Oil is set to trade quietly today as it's all about the Jackson Hole (meeting) tonight," Jeffrey Halley, a Singapore-based senior market analyst at brokerage Oanda.

"What we're seeing is some profit-taking in Asia in very light volumes."

A speech by Federal Reserve Chair Jerome Powell later on Friday t a meeting of central bankers in Jackson Hole is expected to provide some clues on whether the Fed will cut interest rates for a second time this year to boost the US economy.

Traders' expectations of further U monetary easing were clouded by comments from two Fed officials who said on Wednesday that they do not see a case for a rate cut now.

A reduction in interest rates could strengthen the US dollar against other currencies and make dollar-denominated oil more costly for investors.

Oil prices are down for nearly two straight months after the International Energy Agency and the Organization of Petroleum Exporting Countries cut demand growth forecasts as a simmering US-China trade war hit global economic growth.

However, oil prices remained supported by production cuts from OPEC members and Russia while US sanctions have sharply reduced exports from Iran and Venezuela.

Oil prices clawed back the previous day's losses on Friday, with Brent nudging above $60 a barrel, as tighter supplies from key producers offset slowing demand growth while investors await clues from the Federal Reserve on US monetary policy.

Oil prices clawed back the previous day's losses on Friday, with Brent nudging above $60 a barrel, as tighter supplies from key producers offset slowing demand growth while investors await clues from the Federal Reserve on US monetary policy. Brent crude rose 10 cents to $60.02 a barrel by 0118 GMT, while US crude futures were at $55.38 a barrel, up 3 cents. Both contracts were on track for a second weekly gain. "Oil is set to trade quietly today as it's all about the Jackson Hole (meeting) tonight," Jeffrey Halley, a Singapore-based senior market analyst at brokerage Oanda. "What we're seeing is some profit-taking in Asia in very light volumes." A speech by Federal Reserve Chair Jerome Powell later on Friday t a meeting of central bankers in Jackson Hole is expected to provide some clues on whether the Fed will cut interest rates for a second time this year to boost the US economy. Traders' expectations of further U monetary easing were clouded by comments from two Fed officials who said on Wednesday that they do not see a case for a rate cut now. A reduction in interest rates could strengthen the US dollar against other currencies and make dollar-denominated oil more costly for investors. Oil prices are down for nearly two straight months after the International Energy Agency and the Organization of Petroleum Exporting Countries cut demand growth forecasts as a simmering US-China trade war hit global economic growth. However, oil prices remained supported by production cuts from OPEC members and Russia while US sanctions have sharply reduced exports from Iran and Venezuela.

Oil prices eke out small gains ahead of Federal Reserve Chair Jerome Powell speech

Asian shares struggled to make any headway on Friday as weak US &nbsp;manufacturing activity and uncertainty over how much further the Federal Reserve would cut rates added to the general air of caution in markets buffeted by global growth fears.

With political tumult in Hong Kong, Italy and Britain adding to the tense backdrop, investors were keenly waiting on a speech by Fed Chairman Jerome Powell later in the day at a gathering of central bankers in Jackson Hole.

MSCI's broadest index of Asia-Pacific shares outside Japan edged 0.1% lower, though it was up 0.6% for the week and on track to break a four-week losing streak.

Japan's benchmark Nikkei added 0.2% and Australian stocks eased 0.1%, while South Korean shares shed 0.3% after Seoul said it will scrap an intelligence-sharing agreement with Japan.

"It's going to be another wait-and-see day for traders ahead of Powell's Jackson Hole speech. Investors are hoping for some soothing words from him," said Hirokazu Kabeya, chief global strategist at Daiwa Securities.

Wall Street stocks were mixed on Thursday, with the S&amp;P 500 closing little changed, while the Dow was up 0.2% and the Nasdaq falling 0.4%.

In the US bond market, the closely watched two-year, 10-year Treasury yield curve briefly moved back into inversion overnight, a shift that also occurred last week and sent financial markets into a tailspin amid worries of a sharp global downturn. An inversion in the US yield curve has presaged several past US recessions, raising fears the decade-long expansion in the world's biggest economy might be nearing its end.

Overnight, there were more signs of easing momentum as a survey showed US manufacturing activity contracted for the first time since September 2009, though better jobless claims data indicated a resilient labour market.

All of that has made Powell's speech in Jackson Hole pivotal for markets as they look for any clues on future policy easing, after the Fed last month cut rates for the first time since the financial crisis. Any indications of hawkishness in the Fed chief's comments might hurt riskier assets, though the dollar stands to benefit.

The greenback slipped on Thursday, but moved within narrow ranges.

In early Asian trading, the dollar was up 0.1% against a basket of major currencies to 98.249.

The euro also was little changed against US currency at $1.1078. A survey showing a surprise uptick in eurozone business growth for August was offset somewhat by trade war fears knocking future expectations to their weakest in over six years.

The pound jumped to a three-week high of $1.2273 overnight after traders interpreted comments from German Chancellor Angela Merkel to mean that a solution to the Irish border problem could be found before Britain leaves the European Union on October 31.

Merkel on Wednesday challenged Britain to come up with alternatives to the Irish border backstop within 30 days, but French President Emmanuel Macron cautioned there would be no renegotiation of the Brexit deal. Sterling last quoted at $1.2244, almost flat on the day.

China's yuan, which slid to fresh 11-1/2-year lows on Thursday despite support from major state-owned banks in both the spot and forwards markets, maintained its weak tone against the dollar amid worries about the deepening Sino-US trade war.

Onshore spot yuan ended the domestic session down 0.3% at 7.0875 per dollar, its weakest such close since March 14, 2008.

In early trade, the offshore yuan stood at 7.0924 to the dollar, little changed on the day.

Oil prices weakened overnight, with both Brent crude and US West Texas Intermediate down 0.6% each, on worries about the global economy.

Brent crude was last up 0.2% at $60.02 per barrel and WTI crude added 0.1% to $55.38.

Gold prices dipped on Thursday but held near the pivotal level of $1,500 per ounce, underpinned by continued demand for the precious metal amid uncertainties around monetary policy, trade and geopolitical tensions.

Spot gold was last down 0.2% at $1,496.00 an ounce.

Asian shares struggled to make any headway on Friday as weak US manufacturing activity and uncertainty over how much further the Federal Reserve would cut rates added to the general air of caution in markets buffeted by global growth fears.

Asian shares struggled to make any headway on Friday as weak US manufacturing activity and uncertainty over how much further the Federal Reserve would cut rates added to the general air of caution in markets buffeted by global growth fears. With political tumult in Hong Kong, Italy and Britain adding to the tense backdrop, investors were keenly waiting on a speech by Fed Chairman Jerome Powell later in the day at a gathering of central bankers in Jackson Hole. MSCI's broadest index of Asia-Pacific shares outside Japan edged 0.1% lower, though it was up 0.6% for the week and on track to break a four-week losing streak. Japan's benchmark Nikkei added 0.2% and Australian stocks eased 0.1%, while South Korean shares shed 0.3% after Seoul said it will scrap an intelligence-sharing agreement with Japan. "It's going to be another wait-and-see day for traders ahead of Powell's Jackson Hole speech. Investors are hoping for some soothing words from him," said Hirokazu Kabeya, chief global strategist at Daiwa Securities. Wall Street stocks were mixed on Thursday, with the S&P 500 closing little changed, while the Dow was up 0.2% and the Nasdaq falling 0.4%. In the US bond market, the closely watched two-year, 10-year Treasury yield curve briefly moved back into inversion overnight, a shift that also occurred last week and sent financial markets into a tailspin amid worries of a sharp global downturn. An inversion in the US yield curve has presaged several past US recessions, raising fears the decade-long expansion in the world's biggest economy might be nearing its end. Overnight, there were more signs of easing momentum as a survey showed US manufacturing activity contracted for the first time since September 2009, though better jobless claims data indicated a resilient labour market. All of that has made Powell's speech in Jackson Hole pivotal for markets as they look for any clues on future policy easing, after the Fed last month cut rates for the first time since the financial crisis. Any indications of hawkishness in the Fed chief's comments might hurt riskier assets, though the dollar stands to benefit. The greenback slipped on Thursday, but moved within narrow ranges. In early Asian trading, the dollar was up 0.1% against a basket of major currencies to 98.249. The euro also was little changed against US currency at $1.1078. A survey showing a surprise uptick in eurozone business growth for August was offset somewhat by trade war fears knocking future expectations to their weakest in over six years. The pound jumped to a three-week high of $1.2273 overnight after traders interpreted comments from German Chancellor Angela Merkel to mean that a solution to the Irish border problem could be found before Britain leaves the European Union on October 31. Merkel on Wednesday challenged Britain to come up with alternatives to the Irish border backstop within 30 days, but French President Emmanuel Macron cautioned there would be no renegotiation of the Brexit deal. Sterling last quoted at $1.2244, almost flat on the day. China's yuan, which slid to fresh 11-1/2-year lows on Thursday despite support from major state-owned banks in both the spot and forwards markets, maintained its weak tone against the dollar amid worries about the deepening Sino-US trade war. Onshore spot yuan ended the domestic session down 0.3% at 7.0875 per dollar, its weakest such close since March 14, 2008. In early trade, the offshore yuan stood at 7.0924 to the dollar, little changed on the day. Oil prices weakened overnight, with both Brent crude and US West Texas Intermediate down 0.6% each, on worries about the global economy. Brent crude was last up 0.2% at $60.02 per barrel and WTI crude added 0.1% to $55.38. Gold prices dipped on Thursday but held near the pivotal level of $1,500 per ounce, underpinned by continued demand for the precious metal amid uncertainties around monetary policy, trade and geopolitical tensions. Spot gold was last down 0.2% at $1,496.00 an ounce.

Asian stocks shaky before Fed Chairman Jerome Powell's speech as growth woes weigh

&nbsp;Oil&nbsp;rose further above $60 a barrel on Thursday, supported by a drop in US crude inventories and OPEC-led supply cuts, although worries about the global economy weighed.

<a href="https://www.wionews.com/business-%26-economy/oil-prices-rise-after-us-crude-inventories-fall-154520">US crude inventories</a> fell by 2.7 million barrels last week, more than analysts expected.&nbsp;

Still, the US Energy Information Administration also said gasoline and distillate inventories rose.

Brent crude rose 46 cents to $60.76 a barrel by 1017 GMT. US West Texas Intermediate crude added 40 cents to $56.08.

Traders across the board are awaiting a speech from<a href="https://www.wionews.com/business-economy/dow-ends-above-27000-points-for-first-time-sp-500-hits-record-on-federal-reserve-rate-cut-optimism-235154"> Federal Reserve Chairman Jerome Powell </a>on Friday in Jackson Hole, Wyoming that could indicate whether the central bank will continue to cut interest rates.

"Oil&nbsp;looks in limbo at the moment," said Craig Erlam, an analyst at OANDA.&nbsp;

"It's been steadily rising over the last couple of weeks but not in any convincing way."

"A risk rally at the end of the week may get it moving again but that hangs on Powell."

The price of Brent is up by about 13 per cent this year, supported by supply cuts led by the Organization of the Petroleum Exporting Countries, and export cuts in Iran and Venezuela which are under the US 
sanctions.

Iran on Wednesday said if its&nbsp;oil&nbsp;exports are cut to zero, international waterways would not have the same security as before, cautioning Washington against raising pressure on Tehran.

But a slowdown in economic growth amid the US-China trade dispute and Brexit has been pressuring prices and forecasters such as the International Energy Agency have been lowering forecasts for world&nbsp;oil&nbsp;demand.

US President Donald Trump on Wednesday said he was "the chosen one" to address trade imbalances with China, even as congressional researchers warned his tariffs would reduce US economic output by 0.3per cent in 2020.

The Jackson Hole speech is important for&nbsp;oil&nbsp;as signals from the Fed on monetary easing affect the US dollar. A weaker US currency tends to support&nbsp;oil&nbsp;prices, and the dollar eased on Thursday against a basket of currencies.

"The focus now is going to be on Jackson Hole, I think, to the end of the week," said Olivier Jakob,&nbsp;oil&nbsp;analyst at Petromatrix.

Oil rose further above $60 a barrel on Thursday, supported by a drop in US crude inventories and OPEC-led supply cuts, although worries about the global economy weighed.

Oil rose further above $60 a barrel on Thursday, supported by a drop in US crude inventories and OPEC-led supply cuts, although worries about the global economy weighed. US crude inventories fell by 2.7 million barrels last week, more than analysts expected. Still, the US Energy Information Administration also said gasoline and distillate inventories rose. Brent crude rose 46 cents to $60.76 a barrel by 1017 GMT. US West Texas Intermediate crude added 40 cents to $56.08. Traders across the board are awaiting a speech from Federal Reserve Chairman Jerome Powell on Friday in Jackson Hole, Wyoming that could indicate whether the central bank will continue to cut interest rates. "Oil looks in limbo at the moment," said Craig Erlam, an analyst at OANDA. "It's been steadily rising over the last couple of weeks but not in any convincing way." "A risk rally at the end of the week may get it moving again but that hangs on Powell." The price of Brent is up by about 13 per cent this year, supported by supply cuts led by the Organization of the Petroleum Exporting Countries, and export cuts in Iran and Venezuela which are under the US sanctions. Iran on Wednesday said if its oil exports are cut to zero, international waterways would not have the same security as before, cautioning Washington against raising pressure on Tehran. But a slowdown in economic growth amid the US-China trade dispute and Brexit has been pressuring prices and forecasters such as the International Energy Agency have been lowering forecasts for world oil demand. US President Donald Trump on Wednesday said he was "the chosen one" to address trade imbalances with China, even as congressional researchers warned his tariffs would reduce US economic output by 0.3per cent in 2020. The Jackson Hole speech is important for oil as signals from the Fed on monetary easing affect the US dollar. A weaker US currency tends to support oil prices, and the dollar eased on Thursday against a basket of currencies. "The focus now is going to be on Jackson Hole, I think, to the end of the week," said Olivier Jakob, oil analyst at Petromatrix.

Oil steadies above $60 over OPEC supply cuts, global slowdown worries

Four former leaders of the US Federal Reserve have called for the independence of the central bank, saying that the Fed and its chair must be permitted to act in the best interests of the economy, free of short-term political pressures, and, in particular, without the threat of removal or demotion of Fed leaders for political reasons.

In an opinion piece published on The Wall Street Journal on Monday, Paul Volcker, Alan Greenspan, Ben Bernanke and Janet Yellen said that an economy is strongest and functions best when the central bank acts independently and relies solely on sound economic principles and data.

The piece wrote, "Research has shown that monetary policy based on the political (rather than economic) needs of the moment leads to worse economic performance in the long run, including higher inflation and slower growth".

"Even the perception that monetary-policy decisions are politically motivated, or influenced by threats that policymakers won't be able to serve out their terms of office, can undermine public confidence that the central bank is acting in the best interest of the economy. That can lead to unstable financial markets and worse economic outcomes," the piece wrote.

The co-signed article came after US President Donald Trump's criticism of Fed Chairman Jerome Powell last week when he lashed out at Powell for not signalling the start of "a lengthy and aggressive rate-cutting cycle." Trump on Monday urged the Fed to pay attention to his remarks when he falsely accused China of "currency manipulation" on Twitter.

Trump has repeatedly voiced his discontent of the Fed's monetary policy over the past few months and even reportedly discussed an attempt to remove Powell from his position, raising questions about the central bank's independence.

Powell, meanwhile, has repeatedly stressed the Fed's commitment to independence and said he fully intends to serve a four-year term.

Four former leaders of the US Federal Reserve have called for the independence of the central bank, saying that the Fed and its chair must be permitted to act in the best interests of the economy, free of short-term political pressures, and, in particular, without the threat of removal or demotion of Fed leaders for political reasons.

Four former leaders of the US Federal Reserve have called for the independence of the central bank, saying that the Fed and its chair must be permitted to act in the best interests of the economy, free of short-term political pressures, and, in particular, without the threat of removal or demotion of Fed leaders for political reasons. In an opinion piece published on The Wall Street Journal on Monday, Paul Volcker, Alan Greenspan, Ben Bernanke and Janet Yellen said that an economy is strongest and functions best when the central bank acts independently and relies solely on sound economic principles and data. The piece wrote, "Research has shown that monetary policy based on the political (rather than economic) needs of the moment leads to worse economic performance in the long run, including higher inflation and slower growth". "Even the perception that monetary-policy decisions are politically motivated, or influenced by threats that policymakers won't be able to serve out their terms of office, can undermine public confidence that the central bank is acting in the best interest of the economy. That can lead to unstable financial markets and worse economic outcomes," the piece wrote. The co-signed article came after US President Donald Trump's criticism of Fed Chairman Jerome Powell last week when he lashed out at Powell for not signalling the start of "a lengthy and aggressive rate-cutting cycle." Trump on Monday urged the Fed to pay attention to his remarks when he falsely accused China of "currency manipulation" on Twitter. Trump has repeatedly voiced his discontent of the Fed's monetary policy over the past few months and even reportedly discussed an attempt to remove Powell from his position, raising questions about the central bank's independence. Powell, meanwhile, has repeatedly stressed the Fed's commitment to independence and said he fully intends to serve a four-year term.

Former United States Federal leaders call for independence of Central Bank

The dollar charged to its highest in more than two years on Thursday after the <a href="https://www.google.com/url?client=internal-uds-cse&amp;cx=006054055338965708568:09spwrlibei&amp;q=https://www.wionews.com/business-economy/stormy-sterling-sinks-again-stocks-wilt-before-fed-239448&amp;sa=U&amp;ved=2ahUKEwjO-ZbLuOHjAhUBr48KHSApDvgQFjAFegQIBBAC&amp;usg=AOvVaw3Y8jTTDaVY7qnK939Bej7w">Federal Reserve</a> spoiled hopes of a run of US interest rate cuts.

A blizzard of global data and events was going on, but it was Fed Chair Jerome Powell's remarks on Wednesday that set the markets running. Powell said the first US rate cut in over a decade was "not the beginning of a long series of rate cuts".

The dollar’s reaction said it all. The DXY index surged to its highest in more than two years, euro/dollar dropped below $1.11 for the first time since May 2017, and Brexit-hobbled sterling hit 30-month lows just above $1.21.

World stocks had recoiled overnight and emerging markets had their longest run of falls in almost a year.

"Markets interpreted the Fed’s communication as slightly hawkish and therefore further rate cuts in the immediate future were somewhat priced out," said David Milleker, senior economic advisor at Union Investment. "And the dollar strengthened. All in all, the Fed did not achieve what it presumably wanted."

US Treasuries were sold off as investors scaled back their pre-Fed expectations for at least 100 basis points of cuts in the near term. Yields on 10-year notes climbed as high as 2.058% in Europe from a US close of 2.007%.

WATCH VIDEO

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Core eurozone bond yields were rising, too, although -0.428% German Bund levels were still extraordinary. "I didn’t say it’s just one rate cut," Powell had been careful to emphasise after Wednesday's 25-basis-point move.

Instead, he characterised it as "a mid-cycle adjustment to policy", citing signs of a global slowdown, US trade tensions and a desire to boost inflation.

Wall Street fell afterwards and E-minis futures for the S&amp;P 500 were pointing 0.15% lower.

MSCI's broadest index of Asia-Pacific shares outside Japan fell 0.8%, extending losses for a fifth day to the lowest since mid-June and posting its biggest one-day percentage drop in a month.

Japan's Nikkei rose, reversing early declines. Australian shares declined 0.4%. Losses by Chinese shares ended down 0.8%.

"We believe the Fed is trying to thread the needle, balancing market jitters about slowing global growth with robust consumer spending and a strong job market in the US," said Nick Maroutsos, co-head of global bonds at Janus Henderson.

"In other words, by cutting just 25 bps, the Fed is trying to bolster market confidence while also keeping some dry powder in reserve in case of an economic shock."

Trade Talks

Adding to worries, the United States and China on Wednesday ended a brief round of talks without much progress in ending their year-long trade war.

Downbeat data and factory surveys on Thursday had also pointed to further weakness for Asia's trade-reliant economies.

South Korea's exports fell for an eighth straight month in July amid weak global demand and a dispute with Japan. New export orders shrank the most in about six years.

South Korea, the world's sixth-largest exporter, is the first major industrial economy to release trade data each month, providing an early assessment on the health of global demand.

Pressure on Chinese factories eased slightly, but manufacturing activity continued to shrink.

"The broader global trade dynamic remains a challenge," Morgan Stanley strategist Michael Zezas said. "Trade should continue to drag on corporate confidence, CapEx and global growth in the near term."

In Europe's foreign exchange markets, sterling dropped as low as $1.2101 before a Bank of England meeting that's expected to leave its 0.75% interest rate unchanged but result in plenty of interesting discussions.

Fears of a <a href="https://www.google.com/url?client=internal-uds-cse&amp;cx=006054055338965708568:09spwrlibei&amp;q=https://www.wionews.com/world/britain-to-spend-an-extra-26-billion-on-no-deal-brexit-planning-239860&amp;sa=U&amp;ved=2ahUKEwjd24uDu-HjAhUW8XMBHSfID2IQFjAAegQIBhAC&amp;usg=AOvVaw05e85f7pwO51L5lCnpMiS3">no-deal Brexit</a> now that Boris Johnson is prime minister continue to afflict the pound, although it was fractionally higher against a weakening euro at 91.17 pence.

"Sterling remains vulnerable to a further escalation in Brexit tensions and we anticipate the market will likely discount higher risks of a ‘no deal’ outcome in the weeks ahead," said Roger Hallam, currency chief investment officer at JP Morgan Asset Management.

Elsewhere, the Aussie dollar slipped below key chart support of $0.6832 to as low as $0.6828, a level not seen since an early January "flash crash".

The kiwi hit a six-week trough of $0.6535 on expectations the Reserve Bank of New Zealand will cut rates next week.

US crude futures fell 76 cents to $57.82 per barrel after comments on the rating outlook. Brent was down 71 cents at $64.34.

Spot gold also fell, to $1,405.26.

The dollar charged to its highest in more than two years on Thursday after the Federal Reserve spoiled hopes of a run of US interest rate cuts. A blizzard of global data and events was going on, but it was Fed Chair Jerome Powell's remarks on Wednesday that set the markets running.

The dollar charged to its highest in more than two years on Thursday after the Federal Reserve spoiled hopes of a run of US interest rate cuts. A blizzard of global data and events was going on, but it was Fed Chair Jerome Powell's remarks on Wednesday that set the markets running. Powell said the first US rate cut in over a decade was "not the beginning of a long series of rate cuts". The dollar’s reaction said it all. The DXY index surged to its highest in more than two years, euro/dollar dropped below $1.11 for the first time since May 2017, and Brexit-hobbled sterling hit 30-month lows just above $1.21. World stocks had recoiled overnight and emerging markets had their longest run of falls in almost a year. "Markets interpreted the Fed’s communication as slightly hawkish and therefore further rate cuts in the immediate future were somewhat priced out," said David Milleker, senior economic advisor at Union Investment. "And the dollar strengthened. All in all, the Fed did not achieve what it presumably wanted." US Treasuries were sold off as investors scaled back their pre-Fed expectations for at least 100 basis points of cuts in the near term. Yields on 10-year notes climbed as high as 2.058% in Europe from a US close of 2.007%. WATCH VIDEO × Core eurozone bond yields were rising, too, although -0.428% German Bund levels were still extraordinary. "I didn’t say it’s just one rate cut," Powell had been careful to emphasise after Wednesday's 25-basis-point move. Instead, he characterised it as "a mid-cycle adjustment to policy", citing signs of a global slowdown, US trade tensions and a desire to boost inflation. Wall Street fell afterwards and E-minis futures for the S&P 500 were pointing 0.15% lower. MSCI's broadest index of Asia-Pacific shares outside Japan fell 0.8%, extending losses for a fifth day to the lowest since mid-June and posting its biggest one-day percentage drop in a month. Japan's Nikkei rose, reversing early declines. Australian shares declined 0.4%. Losses by Chinese shares ended down 0.8%. "We believe the Fed is trying to thread the needle, balancing market jitters about slowing global growth with robust consumer spending and a strong job market in the US," said Nick Maroutsos, co-head of global bonds at Janus Henderson. "In other words, by cutting just 25 bps, the Fed is trying to bolster market confidence while also keeping some dry powder in reserve in case of an economic shock." Trade Talks Adding to worries, the United States and China on Wednesday ended a brief round of talks without much progress in ending their year-long trade war. Downbeat data and factory surveys on Thursday had also pointed to further weakness for Asia's trade-reliant economies. South Korea's exports fell for an eighth straight month in July amid weak global demand and a dispute with Japan. New export orders shrank the most in about six years. South Korea, the world's sixth-largest exporter, is the first major industrial economy to release trade data each month, providing an early assessment on the health of global demand. Pressure on Chinese factories eased slightly, but manufacturing activity continued to shrink. "The broader global trade dynamic remains a challenge," Morgan Stanley strategist Michael Zezas said. "Trade should continue to drag on corporate confidence, CapEx and global growth in the near term." In Europe's foreign exchange markets, sterling dropped as low as $1.2101 before a Bank of England meeting that's expected to leave its 0.75% interest rate unchanged but result in plenty of interesting discussions. Fears of a no-deal Brexit now that Boris Johnson is prime minister continue to afflict the pound, although it was fractionally higher against a weakening euro at 91.17 pence. "Sterling remains vulnerable to a further escalation in Brexit tensions and we anticipate the market will likely discount higher risks of a ‘no deal’ outcome in the weeks ahead," said Roger Hallam, currency chief investment officer at JP Morgan Asset Management. Elsewhere, the Aussie dollar slipped below key chart support of $0.6832 to as low as $0.6828, a level not seen since an early January "flash crash". The kiwi hit a six-week trough of $0.6535 on expectations the Reserve Bank of New Zealand will cut rates next week. US crude futures fell 76 cents to $57.82 per barrel after comments on the rating outlook. Brent was down 71 cents at $64.34. Spot gold also fell, to $1,405.26.

Mind your backs, dollar coming through!

Facebook must meet "a very high standard" before it moves ahead with its planned <a href="https://www.wionews.com/world/if-facebooks-libra-wants-to-become-a-bank-it-must-must-seek-new-banking-charter-trump-235162">digital currency Libra</a>, US Treasury Secretary Steven Mnuchin said Monday.

Mnuchin said US regulators have already expressed concerns to Facebook about the plan for a global cryptocurrency, noting that these kinds of virtual coins have in the past been associated with money laundering and illicit activities.

"Whether they're banks or non-banks, they're under the same regulatory environment," Mnuchin told reporters at the White House, adding that Facebook "will have to have a very high standard before they have access to the financial system."

Facebook last month unveiled its <a href="https://www.wionews.com/world/facebooks-libra-currency-under-fire-235697">plans for Libra</a>, widely regarded as a challenger to dominant global player bitcoin. Expected to launch in the first half of 2020, Libra is designed to be backed by a basket of currency assets to avoid the wild swings of bitcoin and other cryptocurrencies.

Mnuchin said the US Treasury welcomes "responsible innovations" that can improve the efficiency of the financial system but added: "Our overriding goal is to maintain the integrity of the financial system and protect it from abuse."

'National security issue'

He said US regulators have met with Facebook officials on this question, and how Facebook can protect against the new virtual coin being used for criminal activity.

"This is indeed a national security issue," the Treasury chief said.

Facebook, he added, must implement safeguards against the use of Libra for money laundering and terrorist financing and comply with other financial regulations.

Commenting on Facebook's claim that Libra could lower costs and help people without access to traditional financial services, Mnuchin said, "That's fine (but) they've got a lot of work to do to convince us they can get to that place."

Mnuchin's comments echoed concerns voiced by Federal Reserve Chairman Jerome Powell and regulators around the world, as well as by lawmakers set to open hearings this week on the plan by Facebook and its partners in the Libra project.

Hearing set Tuesday

David Marcus, who heads Facebook's digital wallet and blockchain efforts, said in testimony prepared for delivery Tuesday that he expects regulators to carry out an extensive review of the Libra project.

"The time between now and launch is designed to be an open process and subject to regulatory oversight and review," Marcus was to say in his remarks, which were released by the Senate Banking Committee.

"We know we need to take the time to get this right. And I want to be clear: Facebook will not offer the Libra digital currency until we have fully addressed regulatory concerns and received appropriate approvals."

Marcus said that Libra, whose association will be based in Geneva, will be supervised by the Swiss Financial Markets Supervisory Authority, but would also register with the US Treasury's FinCEN (Financial Crimes Enforcement Network) to comply with anti-money laundering regulations.

Facebook "will work with the Federal Reserve and other central banks to make sure Libra does not compete with sovereign currencies or interfere with monetary policy," Marcus added.

The companies behind Libra include payment giants Visa, MasterCard and PayPal, as well as ride-hailing apps Lyft and Uber.

Central bankers around the world have said they would carefully study the proposed currency and last week US President Donald Trump weighed in.

"I am not a fan of bitcoin and other cryptocurrencies, which are not money, and whose value is highly volatile and based on thin air," he said.

Facebook must meet "a very high standard" before it moves ahead with its planned digital currency Libra, US Treasury Secretary Steven Mnuchin said Monday. Mnuchin said US regulators have already expressed concerns to Facebook about the plan for a global cryptocurrency, noting that these kinds of virtual coins have in the past been associated with money laundering and illicit activities.

Facebook must meet "a very high standard" before it moves ahead with its planned digital currency Libra, US Treasury Secretary Steven Mnuchin said Monday. Mnuchin said US regulators have already expressed concerns to Facebook about the plan for a global cryptocurrency, noting that these kinds of virtual coins have in the past been associated with money laundering and illicit activities. "Whether they're banks or non-banks, they're under the same regulatory environment," Mnuchin told reporters at the White House, adding that Facebook "will have to have a very high standard before they have access to the financial system." Facebook last month unveiled its plans for Libra, widely regarded as a challenger to dominant global player bitcoin. Expected to launch in the first half of 2020, Libra is designed to be backed by a basket of currency assets to avoid the wild swings of bitcoin and other cryptocurrencies. Mnuchin said the US Treasury welcomes "responsible innovations" that can improve the efficiency of the financial system but added: "Our overriding goal is to maintain the integrity of the financial system and protect it from abuse." 'National security issue' He said US regulators have met with Facebook officials on this question, and how Facebook can protect against the new virtual coin being used for criminal activity. "This is indeed a national security issue," the Treasury chief said. Facebook, he added, must implement safeguards against the use of Libra for money laundering and terrorist financing and comply with other financial regulations. Commenting on Facebook's claim that Libra could lower costs and help people without access to traditional financial services, Mnuchin said, "That's fine (but) they've got a lot of work to do to convince us they can get to that place." Mnuchin's comments echoed concerns voiced by Federal Reserve Chairman Jerome Powell and regulators around the world, as well as by lawmakers set to open hearings this week on the plan by Facebook and its partners in the Libra project. Hearing set Tuesday David Marcus, who heads Facebook's digital wallet and blockchain efforts, said in testimony prepared for delivery Tuesday that he expects regulators to carry out an extensive review of the Libra project. "The time between now and launch is designed to be an open process and subject to regulatory oversight and review," Marcus was to say in his remarks, which were released by the Senate Banking Committee. "We know we need to take the time to get this right. And I want to be clear: Facebook will not offer the Libra digital currency until we have fully addressed regulatory concerns and received appropriate approvals." Marcus said that Libra, whose association will be based in Geneva, will be supervised by the Swiss Financial Markets Supervisory Authority, but would also register with the US Treasury's FinCEN (Financial Crimes Enforcement Network) to comply with anti-money laundering regulations. Facebook "will work with the Federal Reserve and other central banks to make sure Libra does not compete with sovereign currencies or interfere with monetary policy," Marcus added. The companies behind Libra include payment giants Visa, MasterCard and PayPal, as well as ride-hailing apps Lyft and Uber. Central bankers around the world have said they would carefully study the proposed currency and last week US President Donald Trump weighed in. "I am not a fan of bitcoin and other cryptocurrencies, which are not money, and whose value is highly volatile and based on thin air," he said.

Facebook needs 'very high standard' for Libra coin: US Treasury Steven Mnuchin

All three of Wall Street's main indices popped to fresh records on Friday, ending the week on an emphatic note as investors grew increasingly confident the <a href="https://www.wionews.com/business-economy/dow-ends-above-27000-points-for-first-time-sp-500-hits-record-on-federal-reserve-rate-cut-optimism-235154">Federal Reserve will cut </a>interest rates at the end of the month.

In congressional testimony this week, Federal Reserve Chairman Jerome Powell told lawmakers "crosscurrents" increased risks to the US economic outlook -- strongly suggesting a rate cut was in the cards at the Fed's next policy meeting in less than three weeks.

The broad-based S&amp;P 500 closed above the 3,000-mark for the first time ever.

Jack Ablin of Cresset Wealth Advisors said investors also were encouraged by the outlook for what could be better-than-expected corporate revenue.

However, with corporate earnings season set to begin in earnest, S&amp;P 500 companies are forecast to see weaker profit growth compared to last year, according to FactSet. It would be the second consecutive quarter of slowing profit, something that has not happened in three years.

"But the next question we expect is,&nbsp;where do we go from there?" he said.

"The market needs to feed on something. The appetite of the market for low rates is insatiable. The question now is can they shift their attention to earnings."

While the positive sentiment initially filtered through to Asia and Europe on Friday, the momentum petered out in late European trading.

Meanwhile, China's economy grew at its slowest rate in nearly three decades in the second quarter, hit by the US-China trade war and weakening global demand, according to an AFP survey of analysts.

The world's second-largest economy likely expanded 6.2 per cent in April-June, according to the poll of 10 economists ahead of the official gross domestic product report Monday.

Oil prices rise

Elsewhere, geopolitical tensions rose after armed Iranian boats threatened a British oil tanker earlier in the week provided support for oil prices, although gains were limited by longer-term oversupply concerns.

Iran's menacing of the BP supertanker on Wednesday appeared to be in retaliation for Britain's seizure of the Iranian Grace 1 tanker off Gibraltar on July 4.

"With Iran seeking retribution for the UK's actions around Gibraltar, there is a distinct possibility that we could see an upside shock to prices," said IG trading group analyst Joshua Mahony.&nbsp;

Britain said it will send a second warship to the Gulf, while the Pentagon said it was discussing military escorts for vessels in the Gulf.

But the rises in oil prices as a result of the incident have been capped by an oversupplied oil market, according to traders.

And the IEA on Friday said the recent decision by oil-producing countries to prolong cuts in output will not fundamentally change the outlook for the market.&nbsp;

All three of Wall Street's main indices popped to fresh records on Friday, ending the week on an emphatic note as investors grew increasingly confident the Federal Reserve will cut interest rates at the end of the month.

All three of Wall Street's main indices popped to fresh records on Friday, ending the week on an emphatic note as investors grew increasingly confident the Federal Reserve will cut interest rates at the end of the month. In congressional testimony this week, Federal Reserve Chairman Jerome Powell told lawmakers "crosscurrents" increased risks to the US economic outlook -- strongly suggesting a rate cut was in the cards at the Fed's next policy meeting in less than three weeks. The broad-based S&P 500 closed above the 3,000-mark for the first time ever. Jack Ablin of Cresset Wealth Advisors said investors also were encouraged by the outlook for what could be better-than-expected corporate revenue. However, with corporate earnings season set to begin in earnest, S&P 500 companies are forecast to see weaker profit growth compared to last year, according to FactSet. It would be the second consecutive quarter of slowing profit, something that has not happened in three years. "But the next question we expect is, where do we go from there?" he said. "The market needs to feed on something. The appetite of the market for low rates is insatiable. The question now is can they shift their attention to earnings." While the positive sentiment initially filtered through to Asia and Europe on Friday, the momentum petered out in late European trading. Meanwhile, China's economy grew at its slowest rate in nearly three decades in the second quarter, hit by the US-China trade war and weakening global demand, according to an AFP survey of analysts. The world's second-largest economy likely expanded 6.2 per cent in April-June, according to the poll of 10 economists ahead of the official gross domestic product report Monday. Oil prices rise Elsewhere, geopolitical tensions rose after armed Iranian boats threatened a British oil tanker earlier in the week provided support for oil prices, although gains were limited by longer-term oversupply concerns. Iran's menacing of the BP supertanker on Wednesday appeared to be in retaliation for Britain's seizure of the Iranian Grace 1 tanker off Gibraltar on July 4. "With Iran seeking retribution for the UK's actions around Gibraltar, there is a distinct possibility that we could see an upside shock to prices," said IG trading group analyst Joshua Mahony. Britain said it will send a second warship to the Gulf, while the Pentagon said it was discussing military escorts for vessels in the Gulf. But the rises in oil prices as a result of the incident have been capped by an oversupplied oil market, according to traders. And the IEA on Friday said the recent decision by oil-producing countries to prolong cuts in output will not fundamentally change the outlook for the market.

Wall Street notches all-time highs as rate cut hopes lift investor spirits

Wall Street stocks cheered dovish testimony from Federal Reserve Chair Jerome Powell on Wednesday, lifting the Nasdaq to a fresh record while the prospect of looser monetary <a href="https://www.wionews.com/world/sp-500-hits-3000-for-the-first-time-as-fed-signals-possible-rate-cut-234770">policy pressured the dollar</a>.

In the first of two days of congressional testimony, Powell said many central bankers believed the case for lower rates "had strengthened" as myriad trade conflicts cloud the growth outlook.

Since the June meeting, when Powell's dovish remarks were interpreted as signalling a possible cut, "it appears that uncertainties around trade tension and concerns about the strength of the global economy continue to weigh on the US economic outlook," Powell said.

The remarks confirmed to broad investor expectations about what Powell would say and appeared to quash speculation that last week's strong US jobs report would prevent a rate cut later this month.

Powell has been under constant pressure from US President Donald Trump to cut interest rates but said again Wednesday that White House sniping played no role in his outlook.

All three major indices surged to all-time intraday records near the start of the Wall Street session after Powell's written congressional testimony was released. But the tech-rich Nasdaq Composite Index was the only one to hold the record, ending at 8,202.53, up 0.8 per cent.

The Dow and S&amp;P 500 also finished higher on a day in which European stocks retreated and leading Asian bourses were mixed.

The dollar also shifted course following Powell's remarks.

The US currency had rallied following the jobs report but "today's testimony implies that a rate cut is a 'done deal,'" said Matt Weller in a note on Forex.com.

Heading into Wednesday's much-anticipated hearing, many investors had taken an interest rate cut as a near certainty, viewing the next meeting as a question of how aggressively the Fed would act.

"I don't think it's changed anything. Everyone expected him to cut in July," said Maris Ogg of Tower Bridge Advisors, who thinks the Fed will undertake a 25 basis point cut in interest rates this month.

"But a cut of 50 basis points is not gonna happen," Ogg said. "We're not seeing that much weakness and it would indicate that something is not working well."

Following the testimony, most investors still predicted a smaller interest rate cut but a solid minority bet on a larger 50 basis point cut.

Christopher Vecchio of Daily FX, meanwhile, said Powell's appearance "laid the groundwork for a series of interest rate cuts over the coming months."

In other markets, oil prices jumped more than two per cent after a government inventory report showed a massive drop in US stockpiles last week. Traders also cheered reports that Russian output fell in July to its lowest in nearly three years.

Other factors boosting oil prices included continued diplomatic tensions involving OPEC member Iran and a storm in the Gulf of Mexico that prompted some producers to evacuate offshore workers and suspend some output.

Wall Street stocks cheered dovish testimony from Federal Reserve Chair Jerome Powell on Wednesday, lifting the Nasdaq to a fresh record while the prospect of looser monetary policy pressured the dollar.

Wall Street stocks cheered dovish testimony from Federal Reserve Chair Jerome Powell on Wednesday, lifting the Nasdaq to a fresh record while the prospect of looser monetary policy pressured the dollar. In the first of two days of congressional testimony, Powell said many central bankers believed the case for lower rates "had strengthened" as myriad trade conflicts cloud the growth outlook. Since the June meeting, when Powell's dovish remarks were interpreted as signalling a possible cut, "it appears that uncertainties around trade tension and concerns about the strength of the global economy continue to weigh on the US economic outlook," Powell said. The remarks confirmed to broad investor expectations about what Powell would say and appeared to quash speculation that last week's strong US jobs report would prevent a rate cut later this month. Powell has been under constant pressure from US President Donald Trump to cut interest rates but said again Wednesday that White House sniping played no role in his outlook. All three major indices surged to all-time intraday records near the start of the Wall Street session after Powell's written congressional testimony was released. But the tech-rich Nasdaq Composite Index was the only one to hold the record, ending at 8,202.53, up 0.8 per cent. The Dow and S&P 500 also finished higher on a day in which European stocks retreated and leading Asian bourses were mixed. The dollar also shifted course following Powell's remarks. The US currency had rallied following the jobs report but "today's testimony implies that a rate cut is a 'done deal,'" said Matt Weller in a note on Forex.com. Heading into Wednesday's much-anticipated hearing, many investors had taken an interest rate cut as a near certainty, viewing the next meeting as a question of how aggressively the Fed would act. "I don't think it's changed anything. Everyone expected him to cut in July," said Maris Ogg of Tower Bridge Advisors, who thinks the Fed will undertake a 25 basis point cut in interest rates this month. "But a cut of 50 basis points is not gonna happen," Ogg said. "We're not seeing that much weakness and it would indicate that something is not working well." Following the testimony, most investors still predicted a smaller interest rate cut but a solid minority bet on a larger 50 basis point cut. Christopher Vecchio of Daily FX, meanwhile, said Powell's appearance "laid the groundwork for a series of interest rate cuts over the coming months." In other markets, oil prices jumped more than two per cent after a government inventory report showed a massive drop in US stockpiles last week. Traders also cheered reports that Russian output fell in July to its lowest in nearly three years. Other factors boosting oil prices included continued diplomatic tensions involving OPEC member Iran and a storm in the Gulf of Mexico that prompted some producers to evacuate offshore workers and suspend some output.

Nasdaq ends at record high, dollar falls as US Federal Reserve signals possible rate cut

The number of Americans filing applications for unemployment benefits dropped to a three-month low last week, suggesting sustained labor market strength that could help support a slowing economy.

Initial claims for state unemployment benefits declined 13,000 to a seasonally adjusted 209,000 for the week ended July 6, the lowest level since April, the Labor Department said on Thursday. Data for the prior week was revised to show 1,000 more applications received than previously reported.

Economists polled by Reuters had forecast claims rising to 223,000 in the latest week.

The four-week moving average of initial claims, considered a better measure of labor market trends as it irons out week-to-week volatility, fell 3,250 to 219,250 last week.

The Labor Department said no claims were estimated last week. The claims data is entering a period of volatility as auto manufacturers temporarily shut down assembly plants for summer retooling.&nbsp;

Companies carry out the plant closures at different times, which can throw off the model the government uses to strip out seasonal fluctuations from the data.

There is still no sign of an increase in layoffs related to a trade war between the United States and China, which has helped to dim the economy's outlook and raise expectations for an interest rate cut this month, the first in a decade.

<a href="https://www.wionews.com/business-economy/nasdaq-ends-at-record-high-dollar-falls-as-us-fed-signals-possible-rate-cut-234814">Federal Reserve Chairman Jerome Powell</a> told lawmakers on Wednesday that the US central bank would "act as appropriate" to protect the economy from the trade tensions and slowing global growth. (Full Story)

Fed officials are scheduled to meet on July 30-31. The economy is also slowing as last year's massive stimulus from tax cuts and more government spending fades.

&nbsp;Manufacturing is struggling, the trade deficit is widening again, consumer spending is rising moderately and the housing sector remains mired in a soft patch.

Despite the rising risks to the 10-year old economic expansion, the longest in history, the labor market remains healthy.&nbsp;

The economy created 224,000 jobs in June. While the unemployment rate ticked up one-tenth of a percentage point to 3.7%, that was because more people entered the labor market, a sign of confidence in their employment prospects.

Thursday's claims report also showed the number of people receiving benefits after an initial week of aid increased 27,000 to 1.72 million for the week ended June 29, the highest level since March.&nbsp;

The four-week moving average of the so-called continuing claims rose 5,750 to 1.69 million.

The number of Americans filing applications for unemployment benefits dropped to a three-month low last week, suggesting sustained labor market strength that could help support a slowing economy.

The number of Americans filing applications for unemployment benefits dropped to a three-month low last week, suggesting sustained labor market strength that could help support a slowing economy. Initial claims for state unemployment benefits declined 13,000 to a seasonally adjusted 209,000 for the week ended July 6, the lowest level since April, the Labor Department said on Thursday. Data for the prior week was revised to show 1,000 more applications received than previously reported. Economists polled by Reuters had forecast claims rising to 223,000 in the latest week. The four-week moving average of initial claims, considered a better measure of labor market trends as it irons out week-to-week volatility, fell 3,250 to 219,250 last week. The Labor Department said no claims were estimated last week. The claims data is entering a period of volatility as auto manufacturers temporarily shut down assembly plants for summer retooling. Companies carry out the plant closures at different times, which can throw off the model the government uses to strip out seasonal fluctuations from the data. There is still no sign of an increase in layoffs related to a trade war between the United States and China, which has helped to dim the economy's outlook and raise expectations for an interest rate cut this month, the first in a decade. Federal Reserve Chairman Jerome Powell told lawmakers on Wednesday that the US central bank would "act as appropriate" to protect the economy from the trade tensions and slowing global growth. (Full Story) Fed officials are scheduled to meet on July 30-31. The economy is also slowing as last year's massive stimulus from tax cuts and more government spending fades. Manufacturing is struggling, the trade deficit is widening again, consumer spending is rising moderately and the housing sector remains mired in a soft patch. Despite the rising risks to the 10-year old economic expansion, the longest in history, the labor market remains healthy. The economy created 224,000 jobs in June. While the unemployment rate ticked up one-tenth of a percentage point to 3.7%, that was because more people entered the labor market, a sign of confidence in their employment prospects. Thursday's claims report also showed the number of people receiving benefits after an initial week of aid increased 27,000 to 1.72 million for the week ended June 29, the highest level since March. The four-week moving average of the so-called continuing claims rose 5,750 to 1.69 million.

United States weekly jobless claims fall to three-month low

Domestic stock market indices ended higher on Thursday, driven by broad-based gains and tracking strength across global equities, after dovish comments by the US.

Federal Reserve Chairman Jerome Powell reignited rate-cut hopes.

The broader <a href="https://www.google.com/url?client=internal-uds-cse&amp;cx=006054055338965708568:09spwrlibei&amp;q=https://www.wionews.com/business-economy/sensex-nifty-open-in-red-why-stock-markets-did-not-like-the-budget-233896&amp;sa=U&amp;ved=2ahUKEwjg2tmm2azjAhXh73MBHbu9BkIQFjACegQIDxAC&amp;usg=AOvVaw3hPhOdGMSP_cejdWntbYVZ">Nifty</a> closed up 0.73% at 11,582.90, while the benchmark <a href="https://www.google.com/url?client=internal-uds-cse&amp;cx=006054055338965708568:09spwrlibei&amp;q=https://www.wionews.com/business-economy/post-budget-sensex-down-over-630-points-pnb-stocks-falls-further-233908&amp;sa=U&amp;ved=2ahUKEwjg2tmm2azjAhXh73MBHbu9BkIQFjABegQIDhAC&amp;usg=AOvVaw2FnU-1_YIp9S9XPsEaCrbF">Sensex</a> settled 0.69% higher at 38,823.11.

Zee Entertainment Enterprises Ltd and JSW Steel Ltd were the top two gainers on the Nifty. Zee closed nearly 8% higher while JSW Steel finished the session 4.86% up.

Domestic stock market indices ended higher on Thursday, driven by broad-based gains and tracking strength across global equities, after dovish comments by the US.

Domestic stock market indices ended higher on Thursday, driven by broad-based gains and tracking strength across global equities, after dovish comments by the US. Federal Reserve Chairman Jerome Powell reignited rate-cut hopes. The broader Nifty closed up 0.73% at 11,582.90, while the benchmark Sensex settled 0.69% higher at 38,823.11. Zee Entertainment Enterprises Ltd and JSW Steel Ltd were the top two gainers on the Nifty. Zee closed nearly 8% higher while JSW Steel finished the session 4.86% up.

Sensex, Nifty close higher as Federal chief rekindles rate-cut hopes

Asian shares pulled ahead on Wednesday while rising Treasury yields lifted the dollar as investors waited anxiously to hear if the world's most powerful central banker would confirm or confound expectations for US easing this month.

MSCI's broadest index of <a href="https://www.wionews.com/business-economy/asian-shares-fall-as-bets-off-on-sharp-us-rate-cuts-233889">Asia-Pacific shares</a> outside Japan advanced 0.4 per cent,&nbsp;after three sessions of losses.

South Korea edged up 0.4%, but Japan's Nikkei lagged with a loss of 0.1 per cent&nbsp;E-Mini futures for the S&amp;P 500 were flat, while EURO STOXX and FTSE futures pointed to small opening gains in Europe.

Chinese blue chips barely budged as data showed inflation remained stubbornly subdued despite a spike in pork prices.

A worrying lack of inflation globally is one reason investors are counting on Federal Reserve Chair Jerome Powell to sound suitably dovish when testifying to Congress on Wednesday.

Futures are still fully priced for a 25-basis-point cut at the Fed's July 30-31 meeting but have abandoned wagers on a half-point move. They had implied a 25% probability of an aggressive cut before Friday's upbeat jobs report.

"We still think the odds favour a 25 bps 'insurance' cut," said Kevin Cummins, a senior US economist at NatWest Markets.

"The Fed's consideration of rate cuts is not only about growth but also about inflation, which remains well below target, and inflation expectations, which were breaking to the downside before the Fed signalled the likelihood of cuts."

Overnight, Atlanta Fed bank president Raphael Bostic let nothing out of the bag by saying the central bank was debating the risks and benefits of letting the US economy run "a little hotter."

Lurking in the background, the US and Chinese trade officials held "constructive" talks on trade by phone on Tuesday, White House economic adviser Larry Kudlow said.

Wall Street had been duly circumspect on Tuesday, with the Dow ending down 0.08%, while the S&amp;P 500 added 0.12% and the Nasdaq 0.54%.

A little More Yield

The cooling in US rate fever has seen bonds give back just a little of their huge rally, with yields on two-year Treasuries rising to 1.917% from the recent trough of 1.696%.

That, in turn, has helped the dollar bounce on a basket of currencies to 97.500 from a June low of 95.843.

The dollar also firmed to 108.90 yen, while the euro faded to $1.1206 having been as high as $1.1412 just a couple of weeks ago.

The Mexican peso was nursing a few bruises after sliding on Tuesday when the country's moderate Finance Minister Carlos Urzua suddenly resigned, citing "extremism" in economic policy.

The Canadian dollar was on the defensive ahead of a rate meeting by the Bank of Canada in case policymakers tried to slow the currency's recent rally.

The dollar's gains took the shine off gold, which eased 0.3 per cent to $1,393.68 per ounce.

Oil prices were supported by Middle East tensions and news that US stockpiles fell for a fourth week in a row, easing concerns about oversupply.

Brent crude futures rose 64 cents to $64.80, while US crude gained 82 cents to $58.65 a barrel.

Asian shares pulled ahead on Wednesday while rising Treasury yields lifted the dollar as investors waited anxiously to hear if the world's most powerful central banker would confirm or confound expectations for US easing this month.

Asian shares pulled ahead on Wednesday while rising Treasury yields lifted the dollar as investors waited anxiously to hear if the world's most powerful central banker would confirm or confound expectations for US easing this month. MSCI's broadest index of Asia-Pacific shares outside Japan advanced 0.4 per cent, after three sessions of losses. South Korea edged up 0.4%, but Japan's Nikkei lagged with a loss of 0.1 per cent E-Mini futures for the S&P 500 were flat, while EURO STOXX and FTSE futures pointed to small opening gains in Europe. Chinese blue chips barely budged as data showed inflation remained stubbornly subdued despite a spike in pork prices. A worrying lack of inflation globally is one reason investors are counting on Federal Reserve Chair Jerome Powell to sound suitably dovish when testifying to Congress on Wednesday. Futures are still fully priced for a 25-basis-point cut at the Fed's July 30-31 meeting but have abandoned wagers on a half-point move. They had implied a 25% probability of an aggressive cut before Friday's upbeat jobs report. "We still think the odds favour a 25 bps 'insurance' cut," said Kevin Cummins, a senior US economist at NatWest Markets. "The Fed's consideration of rate cuts is not only about growth but also about inflation, which remains well below target, and inflation expectations, which were breaking to the downside before the Fed signalled the likelihood of cuts." Overnight, Atlanta Fed bank president Raphael Bostic let nothing out of the bag by saying the central bank was debating the risks and benefits of letting the US economy run "a little hotter." Lurking in the background, the US and Chinese trade officials held "constructive" talks on trade by phone on Tuesday, White House economic adviser Larry Kudlow said. Wall Street had been duly circumspect on Tuesday, with the Dow ending down 0.08%, while the S&P 500 added 0.12% and the Nasdaq 0.54%. A little More Yield The cooling in US rate fever has seen bonds give back just a little of their huge rally, with yields on two-year Treasuries rising to 1.917% from the recent trough of 1.696%. That, in turn, has helped the dollar bounce on a basket of currencies to 97.500 from a June low of 95.843. The dollar also firmed to 108.90 yen, while the euro faded to $1.1206 having been as high as $1.1412 just a couple of weeks ago. The Mexican peso was nursing a few bruises after sliding on Tuesday when the country's moderate Finance Minister Carlos Urzua suddenly resigned, citing "extremism" in economic policy. The Canadian dollar was on the defensive ahead of a rate meeting by the Bank of Canada in case policymakers tried to slow the currency's recent rally. The dollar's gains took the shine off gold, which eased 0.3 per cent to $1,393.68 per ounce. Oil prices were supported by Middle East tensions and news that US stockpiles fell for a fourth week in a row, easing concerns about oversupply. Brent crude futures rose 64 cents to $64.80, while US crude gained 82 cents to $58.65 a barrel.

Asia shares rise as US dollar moves up

The S&amp;P 500 surged past 3,000 points for the first time on Wednesday in early trading following congressional testimony from Federal Reserve Chairman Jerome Powell that pointed to a possible interest rate cut.

In prepared testimony ahead of a House hearing, Powell highlighted continued uncertainty about trade as a drag on US growth, amplifying his message from recent appearances that have been widely seen by investors as opening the door to an interest rate cut.

Powell was not explicit but in his remarks to the House Financial Services Committee he noted the Fed in June announced it "would act as appropriate to sustain the expansion."

About 40 minutes into trading, the broad-based S&amp;P 500 stood at 2,997.10, up 0.6 per cent after earlier topping 3,000.

The tech-rich Nasdaq Composite Index rose 0.9 per cent to 8,211.82, while the Dow Jones Industrial Average gained 0.6 per cent to 26,930.36.

Both the S&amp;P 500 and Nasdaq were above their all-time closing highs, while the Dow is about 35 points short of its record.

Powell's comments "gave the market what it was looking for," said Briefing.com analyst Patrick O'Hare.

Futures markets are betting that the Fed at its 31 July meeting will cut interest rates by 25 basis points although some have seen the possibility of a larger cut.

"The Q&amp;A portion of today's testimony will likely be Mr Powell's moment to talk down the prospect of a 50 basis points rate cut at the July meeting," O'Hare said.

"The market should be able to live with that since we suspect the Fed Chair will also stick to the line that the (Fed) will do what it thinks is appropriate to sustain the economic expansion."

The S&P 500 surged past 3,000 points for the first time on Wednesday in early trading following congressional testimony from Federal Reserve Chairman Jerome Powell that pointed to a possible interest rate cut.

The S&P 500 surged past 3,000 points for the first time on Wednesday in early trading following congressional testimony from Federal Reserve Chairman Jerome Powell that pointed to a possible interest rate cut. In prepared testimony ahead of a House hearing, Powell highlighted continued uncertainty about trade as a drag on US growth, amplifying his message from recent appearances that have been widely seen by investors as opening the door to an interest rate cut. Powell was not explicit but in his remarks to the House Financial Services Committee he noted the Fed in June announced it "would act as appropriate to sustain the expansion." About 40 minutes into trading, the broad-based S&P 500 stood at 2,997.10, up 0.6 per cent after earlier topping 3,000. The tech-rich Nasdaq Composite Index rose 0.9 per cent to 8,211.82, while the Dow Jones Industrial Average gained 0.6 per cent to 26,930.36. Both the S&P 500 and Nasdaq were above their all-time closing highs, while the Dow is about 35 points short of its record. Powell's comments "gave the market what it was looking for," said Briefing.com analyst Patrick O'Hare. Futures markets are betting that the Fed at its 31 July meeting will cut interest rates by 25 basis points although some have seen the possibility of a larger cut. "The Q&A portion of today's testimony will likely be Mr Powell's moment to talk down the prospect of a 50 basis points rate cut at the July meeting," O'Hare said. "The market should be able to live with that since we suspect the Fed Chair will also stick to the line that the (Fed) will do what it thinks is appropriate to sustain the economic expansion."

S&P 500 hits 3,000 for the first time as Fed signals possible rate cut

Asian stocks struggled to rebound on Tuesday as investors came to terms with sharply reduced expectations the Federal Reserve will deliver a large interest rate cut at the end of July.

Those views were bolstered after solid gains in US jobs for June and pushed down Wall Street for the second straight day.

MSCI's broadest index of Asia-Pacific shares outside Japan ticked up 0.1% in early trade, after falling 0.6% the previous day. Japan's Nikkei rose 0.5% thanks in part to the yen's retreat against the dollar.

On Wall Street, the S&amp;P 500 lost 0.48% while the Nasdaq Composite dropped 0.78%, led by fall in Apple Inc.

Money market futures are still fully pricing in a 25 basis point cut at the Fed's next policy meeting on July 30-31, but have almost priced out a larger 50 basis point reduction.

"The headline payrolls figures was pretty strong but wages were tepid, so, on the whole, a 25 basis-point cut would be justified as a pre-emptive move and I think the current market pricing is fair," said Naoya Oshikubo, senior economist at Sumitomo Mitsui Trust Asset Management.

Investors' focus is shifting to Fed Chairman Jerome Powell's testimony before Congress later in the week for clues on monetary policy.

In the currency market, fading expectations of aggressive easing by the Fed helped the dollar.

The euro traded at $1.1215, near Monday's low of $1.1207, its weakest level since June 19.

The dollar changed hands at 108.75 yen, having risen up to 108.81 yen in the previous session, its highest in more than a month.

The British pound stood at 1.2518, not far from six-month lows of $1.2481 touched on Friday.

Oil prices were slightly softer as concerns about whether slowing global economic growth would hit oil demand eclipsed tensions over Iran's nuclear programme.

Brent crude futures fell 23 cents, or 0.36% to settle at $63.88 a barrel. US West Texas Intermediate (WTI) crude futures shed 19 cents, or 0.33% to settle at $57.47 a barrel.

Asian stocks struggled to rebound on Tuesday as investors came to terms with sharply reduced expectations the Federal Reserve will deliver a large interest rate cut at the end of July.

Asian stocks struggled to rebound on Tuesday as investors came to terms with sharply reduced expectations the Federal Reserve will deliver a large interest rate cut at the end of July. Those views were bolstered after solid gains in US jobs for June and pushed down Wall Street for the second straight day. MSCI's broadest index of Asia-Pacific shares outside Japan ticked up 0.1% in early trade, after falling 0.6% the previous day. Japan's Nikkei rose 0.5% thanks in part to the yen's retreat against the dollar. On Wall Street, the S&P 500 lost 0.48% while the Nasdaq Composite dropped 0.78%, led by fall in Apple Inc. Money market futures are still fully pricing in a 25 basis point cut at the Fed's next policy meeting on July 30-31, but have almost priced out a larger 50 basis point reduction. "The headline payrolls figures was pretty strong but wages were tepid, so, on the whole, a 25 basis-point cut would be justified as a pre-emptive move and I think the current market pricing is fair," said Naoya Oshikubo, senior economist at Sumitomo Mitsui Trust Asset Management. Investors' focus is shifting to Fed Chairman Jerome Powell's testimony before Congress later in the week for clues on monetary policy. In the currency market, fading expectations of aggressive easing by the Fed helped the dollar. The euro traded at $1.1215, near Monday's low of $1.1207, its weakest level since June 19. The dollar changed hands at 108.75 yen, having risen up to 108.81 yen in the previous session, its highest in more than a month. The British pound stood at 1.2518, not far from six-month lows of $1.2481 touched on Friday. Oil prices were slightly softer as concerns about whether slowing global economic growth would hit oil demand eclipsed tensions over Iran's nuclear programme. Brent crude futures fell 23 cents, or 0.36% to settle at $63.88 a barrel. US West Texas Intermediate (WTI) crude futures shed 19 cents, or 0.33% to settle at $57.47 a barrel.

Asian stocks hobbled by fading expectations for aggressive Fed rate cut

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