US Fed to continue gradual rate hikes to manage potential risks


The Fed seems to be "doing as good a job as they cannot to overshoot" the tightening of monetary policy, said David Levy of Republic Wealth Advisors.

"What I do see here is an affirmation of the Powell Doctrine: We've got a framework of the way the world works, we have these estimates, but they are subject to imprecision", said Michael Gapen, chief USA economist at Barclays PLC in NY.

That is the difference between short-term interest rates and long-term rates.

The Dow Jones Industrial Average rose 133.37 points, or 0.52 percent, to 25,790.35, the S&P 500 gained 17.71 points, or 0.62 percent, to 2,874.69 and the Nasdaq Composite added 67.52 points, or 0.86 percent, to 7,945.98. So, as of now, the Fed has little reason to push rates above the neutral territory and/or hike rates at a faster pace.

On Aug. 20, President Donald Trump said he was "not thrilled" with the Fed raising rates under Powell's leadership. Late next month, the Fed is widely expected to resume raising rates. "The Australian economy is okay regardless of who is prime minister", said Yamamoto.

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

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 Most market participants had expected the central bank to raise rates again in September and December. Rates are still low by any historical measure.

Shots Fired At American Embassy In Turkey
In 2013, a suicide bomber killed a Turkish guard and himself after detonating an explosive device outside the embassy in Ankara. In 2008, three assailants and three Turkish police officers died in a shootout outside the Istanbul embassy.

Questioning Fed actions is normally off limits for United States politicians, since it could raise fears central bankers would feel political pressure and fail to act to head off rising inflation. The president has complained that the Fed's tightening of credit could threaten the continued strong growth he aims to achieve through the tax cuts enacted late past year, a pullback of regulations and a rewriting of trade deals to better serve the United States.

Global stocks generally advanced Friday as investors awaited developments from this weekend's meeting of central bankers in Jackson Hole, Wyoming.

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

"If the strong growth in income and jobs continues, further gradual increases in the target range for the federal funds rate will likely be appropriate", he said.

"The president would like easier monetary policy or at least he would not like to see interest rates marching higher to offset the boost to the economy from his fiscal and trade policies", he said in a research note.

In June, the Fed predicted a total of four hikes this year, up from an earlier estimate of three.