Fed interest rate hikes appear on course after chair Jay Powell's address

Rupee Extends Weakness Against US Dollar 10 Things To Know

"Because monetary policy acts with a lag, waiting for inflation to materialize is undesirable", the paper said.

Trump believes that rate hikes would hinder economic growth and put a cap on the bullish USA stock market.

US stocks rose, sending the S&P 500 Index past its January record, as an expanding economy and surging earnings erased a six-month drought in which equities tumbled into a correction.

Yesterday, the domestic currency had lost 30 paise to end at 70.11 against the greenback due to renewed worries about a hike in U.S. interest rates and rising global trade war jitters.

One of the topics at this year's gathering of central bankers is the slope - not of the Grand Teton Mountains but of the yield curve.

While his remarks will be pored over for a clue about the bank's policy plans, they will attract more interest after Donald Trump's criticism this week of its recent interest rate hikes and accusations it is not backing his economic agenda.

Investors said they were reassured that Powell's comments stayed in line with previous commentary from the Fed regarding policy. "Fed policy should not have anything to do with politics", said Schoar, who is also attending the Jackson Hole conference.

-China trade talks ended without progress, with the markets braced for a speech by Federal Reserve Chairman Jerome Powell for hints on the direction of US monetary policy. Where he stands on the pace of interest rate hikes will be scrutinized after minutes from the Fed's most recent policy meeting indicated the central bank would tighten monetary policy soon. Most Fed watchers foresee two more hikes this year - next month and then in December.

But central bankers are faced with a series of questions about the Fed's plans, including its possible impact overseas. Once interest rates reach an equilibrium, the Fed will cease its rate-hiking path.

Trump on Monday criticised the Fed for hiking rates too quickly, saying he was "not thrilled" with Powell, his own choice to lead the Fed.

The S&P 500 .SPX shed 0.17 percent overnight to pull back slightly from a record high scaled midweek, with industrial shares sagging after the United States and China imposed a fresh round of trade tariffs on each other.

He said the Fed's mistakes of the past, such as a misestimation of full employment that allowed inflation to take off in the 1970s, mean the central bank today should not assume its current estimates of those economic variables are precise.

He stressed that estimates of how the economy works - like those followed by doctoral economists on the Fed staff - were at best "hazy" navigational guides. With unemployment so low, "why isn't the (Federal Open Market Committee) tightening monetary policy more sharply to head off overheating and inflation?"

"He could put in some new ideas or comment on current discussions and that would move the market, but I would say the odds of that is less than 50/50", said Jim Vogel, an interest rate strategist at FTN Financial in Memphis, Tennessee.

Powell says this gradual approach is the wisest policy for the Fed in trying to navigate between the risks of raising rates too fast and thus "needlessly shortening the expansion" and moving too slowly and risking an overheated economy.

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