Strong December hiring unlikely to change Fed's policy stance

Strong December hiring unlikely to change Fed's policy stance

However, after weeks of volatility in the bonds and stock market, Powell appeared to be more cautious regarding the choice of words while making the statement and he seemed to be sympathetic, as he had been quoted saying that the Fed was listening to the market outcry and they would balance the flow of strong economic data against the risks. "And particularly with muted inflation readings that we've seen coming in, we will be patient as we watch to see how the economy evolves".

Powell's remarks reassured investors who have anxious the Fed might raise rates excessively, but Jason Schenker of Prestige Economics suggested the Fed could.

While not a change in policy, it was a nod to market concerns that the Fed had a key decision on "auto-pilot", as Powell put it last month, even as it pledged to be dependent on economic data. In the first event, the Labor Department's December jobs report showed the economy added a robust 312,000 jobs. The Dow Jones industrial average was up around 700 points near the close.

U.S. and European stocks got a boost as the stronger-than-expected jobs report soothed some concerns of slowing economic growth.

Trump has complained that the Fed has pushed rates higher despite the fact that there is no evidence that inflation was getting out of control. "Can we wait?", Cleveland Federal Reserve Bank President Loretta Mester said in an interview with Reuters. Courts in cases that involved other agencies have interpreted that language to not cover policy differences. Stocks saw the worst December rout since the Great Depression and a few near-term Treasury security yields have crept above their longer-term counterparts since Powell's December press conference, a sign that investors were pessimistic about the outlook for growth.

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Markets, however, have mostly tumbled since October on fears of a global economic slowdown and the ongoing U.S. "We are always prepared to shift the stance of policy and to shift it significantly" if needed.

Powell also addressed the issue that the central bank was overusing interest rate policy in an effort to prevent the economy from overheating. "The Fed has willfully ignored trade and interest rate risks while talking a hawkish game".

Since mid-December, investors have been expressing disagreement with Powell's assessment of the economy, saying the Fed had it all wrong and that the economy was weakening.

Compared to comments he made after the Fed raised rates last month, "it's not that he's changed his message. but that he explained it more patiently and in greater detail", said Lou Brien, market strategist at DRW Trading in Chicago. Asked if he had had any face-to-face meetings with Trump, Powell said he had not although he said previous Fed leaders have had discussions from time to time with previous presidents.

President Trump and Democratic leaders failed to strike a deal on Friday to end a partial shutdown of the U.S. government as they fought over Trump's request for $5 billion to fund a wall on the border with Mexico lawmakers said.

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