Global stocks rally after speech by Fed's Powell, oil prices surge

Fredrick Soto
August 27, 2018

The dollar weakened as Mr Powell, speaking at a meeting of global central bankers in Jackson Hole, Wyoming, said a gradual approach of raising rates remains appropriate to protect the USA economy and keep job growth as strong as possible with inflation under control.

With respect to the Fed's interest rate increases, Powell drew a fine line between potential risks in his speech at the central bank's annual retreat at Jackson Hole, Wyoming.

He said a gradual approach to rate hikes is the best way to navigate between the risks of raising rates too fast and "needlessly shortening the expansion" and moving too slowly and risking an overheated economy.

"The Australian dollar is much affected by domestic political uncertainty, but I think it's overdone".

He said prices were rising at about the Fed's target pace of two percent, signaling the United States central bank does not expect to accelerate interest rate increases as some investors have feared.

The Fed's key rate is in a range of 1.75 percent to 2 percent and officials have pegged the neutral rate at 2.9 percent.

Despite the risks from trade disputes, George said in her interview that she believes the economy is performing strongly and regards further Fed rate hikes as justified.

Though they made no public comments Thursday, Chicago Fed President Charles Evans and Boston Fed President Eric Rosengren, once seen as steadfast doves, in recent months have lent their support to rate hikes, conventionally seen as a hawkish action.

ANALYST TAKE: "This year's meeting is more about market structure than current monetary policy and so prepare for a non-event", said Neil Wilson, chief markets analyst at

What's more, the RSI is trending north and could find acceptance above 50.00 (in bullish territory) on Monday.

"We are seeing some of the more cyclical sectors like energy, materials, continuing to move higher on the expectation that the Fed is going to let the economy run a little hot", Zaccarelli said. "But probably not that early, it's probably something like late this year, or next year". "Inflation has moved up and is now near the Federal Open Market Committee's (FOMC) objective of 2 percent after running generally below that level for six years".

A Grand Teton National Park officer stands watch Friday outside the room where the Jackson Hole Economic Policy Symposium was taking place at Jackson.

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

However, some Fed officials anxious that an escalation in current trade disputes could force the central bank to rethink its interest rate hike plans, according to the minutes of the Fed's latest monetary policy meeting.

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

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