Fed chief Powell signals central bank is done with signaling
By Ann Saphir SAN FRANCISCO (Reuters) - Federal Reserve Chairman Jerome Powell has a new message for financial markets: watch the data on jobs, wages and inflation for signals on monetary policy - not the U.S.
By Ann Saphir
SAN FRANCISCO (Reuters) - Federal Reserve Chairman Jerome Powell has a new message for financial markets: watch the data on jobs, wages and inflation for signals on monetary policy - not the U.S. central bank's words or forecasts.
That's a big change for the Fed, which for most of the past decade has done what it could to steer markets on its policy intentions as it nursed a fragile economy to recovery after the financial crisis.
As part of that so-called forward guidance, the Fed for years described its policy stance as "accommodative" to assure markets that it would not strangle economic growth.
But on Wednesday, the Fed removed that phrase from its policy statement.
Some investors read the change as a sign the central bank was nearing an end to the interest rate hike cycle it began in December 2015; JP Morgan chief U.S. economist Michael Feroli called that a "stretch."
Noting the U.S. economy is having a "particularly bright moment," with unemployment expected to remain low, inflation stable, and no recession in sight, Powell said in a press conference on Wednesday that the removal of the "accommodative" wording was not a policy signal at all.
"The question we are answering is, how do we provide the economy just the right amount of support - not too much, not too little - to sustain the recovery and achieve our statutory goals" of full employment and 2 percent inflation, Powell said.
"We don't want to suggest either that we have this precise understanding of where accommodative stops or suggest that's a really important point in our thinking. What we're going to be doing ... is carefully monitoring incoming data."
The Fed on Wednesday announced a widely expected rate increase, its third of the year, bringing its target range for its benchmark overnight lending rate to between 2 percent and 2.25 percent.
Fresh economic forecasts also released on Wednesday showed most policymakers expect the central bank to raise rates five more times before stopping some time in 2020.
But Powell, in effect, said not to put too much store in those forecasts because they could change with incoming data.
He noted that he is unsure when the rate increases he and his colleagues expect to deliver in the next year or two will start to bite into economic growth, or whether the economy's underlying momentum has sped up enough to offset any such drag.
As the Fed raises rates, it will look for signals from the economy, like a slowdown in the labor market or economy, a spike in wages or inflation, or a sudden tightening of financial conditions, to cue an end to its tightening cycle, Powell said.
David Papell, an economics professor at the University of Houston, summed up the Powell-led Fed's approach this way: "Let's wait and see."
(Reporting by Ann Saphir; Editing by Paul Simao)
This story has not been edited by Firstpost staff and is generated by auto-feed.
ATHENS (Reuters) - Greek police used teargas and water cannon to disperse people who had gathered in central Athens on Saturday to protest against mandatory COVID-19 vaccinations. More than 4,000 people rallied outside the Greek parliament for a third time this month to oppose mandatory inoculations for some workers, such as healthcare and nursing staff.
ISTANBUL (Reuters) - Two Turkish soldiers were killed and two were wounded in an attack on their armoured vehicle in northern Syria, and Turkish forces immediately launched retaliatory fire, Turkey's defence ministry said on Saturday. "Our punitive fire against terrorist positions is continuing," the statement on Twitter on said. It did not specify where the attack occurred, but media reports said it was in the al-Bab area.
By Marcelo Rochabrun SAO PAULO (Reuters) - Protesters took to the streets in several Brazilian cities on Saturday to demand the impeachment of far-right President Jair Bolsonaro, whose popularity has fallen in recent weeks amid corruption scandals against the backdrop of the pandemic. This week, news broke that Brazil's defense ministry told congressional leadership that next year's elections would not take place without amending the country's electronic voting system to include a paper trail of each vote. Bolsonaro has suggested several times without evidence that the current system is prone to fraud, allegations that Brazil's government has denied