Powell signals Fed to stay on hold and keep future hike on table

economictimes.indiatimes.com:

Federal Reserve Chair Jerome Powell suggested the US central bank is inclined to hold interest rates steady again at its next meeting while leaving open the possibility of a future hike if policymakers see further signs of resilient economic growth.

The comments effectively affirm market expectations for the Fed to skip a rate increase for a second straight meeting when officials gather on Oct. 31 and Nov. 1. The Fed chief also said a recent run-up in long-term Treasury yields, if they persist, could lessen the need for further hikes “at the margin,” echoing his colleagues and underscoring the importance of tightening financial conditions to the rate outlook over the coming months.

Given the uncertainties and risks, and how far we have come, the committee is proceeding carefully,” Powell said Thursday at the Economic Club of New York. “We will make decisions about the extent of additional policy firming and how long policy will remain restrictive based on the totality of the incoming data, the evolving outlook, and the balance of risks.”

Yields on two-year Treasuries declined after Powell spoke, while 10-year yields pared an increase that pushed them near the 5% mark. The dollar fell against a basket of major currencies, and the S&P 500 index of stocks, after multiple twists and turns, fell.

“For November, he has clearly sent a signal of pause,” said Laura Rosner, partner at Macropolicy Perspectives LLC. “He expects the economy to cool down in the fourth quarter, and yields are doing some of the work for them.”

Protesters Disrupt

Before beginning his remarks, Powell was briefly escorted out of the room after protesters interrupted the New York event. The demonstrators, who were standing arm in arm, were chanting