Asia stocks advance, dollar struggles on signs of more cautious Fed

Asia stocks advance, dollar struggles on signs of more cautious Fed

With the Federal Reserve expected next month to raise rates to what some US central bankers believe is at or near a neutral level, Chairman Jerome Powell is retuning his message to signal a more cautious approach on further rate hikes next year.

Jerome Powell said that the central bank's base interest rate was "just below" estimates of a "neutral" level - one that would neither stimulate nor cool the economy - and that officials were flexible about where it should be, despite forecasting several increases in the coming year. Investors interpreted as Powell either changing his position on interest rates or attempting to correct the incorrect interpretation of his earlier remarks.

That comment, which came just days after Trump's latest criticisms, was well-received by markets: US stocks surged, with the Dow Jones Industrial Average and S&P 500 flipping into positive territory for November.

"He said the magic words", Gregori Volokhine of Meeschaert Financial Services told AFP.

It is not clear whether the idea of perhaps nudging rates above neutral, as he had earlier suggested, is still on the table, or if it means he expects fewer rate hikes, or even a pause.

The Fed has included its views on financial stability in other documents and presentations, including the central bank's semiannual report to Congress on broad economic conditions.

Though done in private, Nixon pressured Burns to keep interest rates low before the 1972 election in order to keep the economy humming.

After the release of the Fed's meeting minutes, traders of interest-rate futures stuck to their bets that the Fed would slow rate hikes next year, to just one.

Iran vows to continue missile tests despite United States sanctions
The European parties to the nuclear deal have refused to pull out and said they would seek ways to continue trade with Iran. The Iran nuclear deal, although highly controversial, was considered one of the Obama administration's major legacies.

US law says Fed officials - and those of other independent agencies - can be "removed for cause", according to a report by The Washington Post on Wednesday.

Powell hinted that although the key lending rate might move higher, there is no preset course. This helps to fulfill the Fed's goal of keeping inflation low, but also slows economic activity. "As always, our decisions on monetary policy will be created to keep the economy on track in light of the changing outlook for jobs and inflation", he said. "You feel your way more under uncertainty of this kind".

Federal Reserve Chairman Jerome Powell said Monday that despite solid economic progress, the country still faces a number of challenges ranging from slow wage-growth for lower-income workers to sluggish productivity and an aging population.

NY Fed chief Williams will be delivering the welcome remarks at a conference on the "Evolving Structure of the US Treasury Market".

And he said the financial system was now "substantially more resilient" than it was before the 2008 financial crisis.

Powell's speech on Wednesday was more about the Fed's inaugural financial stability report than what he called the "meat and potatoes" of jobs and inflation.

While he acknowledged the growing concern over increased borrowing by businesses that already carried a high debt load, he said that for now they were "unlikely to pose a threat to the safety and soundness" of the system in the event of a downturn.

Meanwhile "the unsettled state of trade negotiations, Brexit negotiations, budget discussions between Italy and the European Union, and cyber-related disruptions" all remain risks to the global economy, he said.

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