Offbeat: Fed weighs adopting wait-and-see policy on future rate rises - - PressFrom - US
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OffbeatFed weighs adopting wait-and-see policy on future rate rises

22:55  06 december  2018
22:55  06 december  2018 Source:   online.wsj.com

What to expect from Fed chief's most important speech yet

What to expect from Fed chief's most important speech yet Wall Street's eyes will be glued on Federal Reserve Chairman Jerome Powell when he delivers Wednesday what will be the most critical speech of his short time leading the central bank. require(["medianetNativeAdOnArticle"], function (medianetNativeAdOnArticle) { medianetNativeAdOnArticle.getMedianetNativeAds(true); }); The remarks will come amid sharp market tumult that began after comments he made in early October indicating the Fed was not close to stopping interest rate increases.

Federal Reserve officials are considering whether to signal a new wait - and - see mentality after a likely interest- rate increase at their meeting in December, which could slow the pace U.S.-China tensions, plus worries about economic growth and the tech sector, spell more volatility ahead for investors.

Federal Reserve officials are considering whether to signal a new wait - and - see mentality after a likely interest- rate increase at their Get news and analysis on politics, policy , national security and more, delivered right to your inbox. Federal Reserve Chairman Jerome Powell compared the Fed ’s policy

Federal Reserve officials are considering whether to signal a new wait-and-see mentality after a likely interest-rate increase at their meeting in December, which could slow down the pace of rate increases next year.

Officials still think the broad direction of short-term interest rates will be higher in 2019, according to recent interviews and public statements. But as they push up their benchmark, they are becoming less sure how fast they will need to act or how far they will need to go and want to assess how the economy is holding up under moves they’ve already made.

How they manage this new, less-predictable approach will depend in large part on the performance of the economy and markets in the weeks ahead.

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The Fed released minutes of its January meeting showing officials continued to express confidence in the economy but saw enough warning signs to Jerome H. Powell, the Federal Reserve chairman, has said the Fed has adopted “a patient, wait - and - see approach regarding future policy changes.”

The Federal Reserve executed a sharp about-turn on Wednesday as it put further interest rate rises on hold, citing tepid inflation and rising risks to global In addition, financial conditions had tightened, he said. The upshot was the Fed would adopt a “ wait and see ” approach to future policy changes.

Under the evolving “data dependent” strategy, the Fed could step back from the predictable path of quarterly hikes it’s been on for most of the past two years, raising the possibility it might delay rate increases at some upcoming meetings, according to recent interviews and statements.

Under the old pattern, the Fed would raise rates again in March, but officials now don’t know when their next rate move will be after December.

Recent market turbulence for now hasn’t much dented the Fed’s view that the U.S. economy is on solid footing, with growth strong and unemployment low. But inflation has softened in recent months and falling oil prices portend further declines, reducing the Fed’s sense of urgency about raising rates to prevent the economy from overheating.

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Federal Reserve officials are considering whether to signal a new wait - and - see approach after a likely interest- rate increase at their But as they push up their benchmark, they are becoming less sure how fast they will need to act or how far they will need to go and want to assess how the economy…

Federal Reserve minutes point to December rate hike. Fed minutes: Further hike 'warranted soon,' debate opened on pause. Federal Reserve officials are considering whether to signal a new wait - and - see mentality after a likely interest- rate increase at their meeting in December, which could

Of course, if growth or inflation heats up unexpectedly, the Fed could decide to go further than planned.

Get news and analysis on politics, policy, national security and more, delivered right to your inbox

Federal Reserve Chairman Jerome Powell compared the Fed’s policy strategy to walking into a living room when the lights suddenly go out.

“What do you do? You slow down and you maybe go a little bit less quickly, and you feel your way more,” he said in a speech last week. “So under uncertainty of this kind, you be careful.”

The next important data release comes Friday, when the Labor Department releases November employment data.

Officials are intensely reviewing how to communicate any shift from the predictable path of quarterly increases they’ve been on for the past two years.

As part of its shifting plans, officials are weighing how to modify language in a central bank policy statement that since December 2015 has described plans for “gradual increases” in the fed-funds rate. In January, officials qualified the phrase by adding the word “further” to signal greater conviction in their plans.

Beginning at their Nov. 7-8 meeting, officials discussed ways to walk this language out of the statement over the course of several meetings, given their increased uncertainty about how much further to go and at what pace.

“We shouldn’t be offering guidance if there’s this much uncertainty about the future path of interest rates,” said Minneapolis Fed President Neel Kashkari in an interview. If that guidance “ends up being wrong, it hurts or undermines our credibility.”

Will landing be soft or "chaotic" as Fed begins to stop rate hike cycle.
In June 2006, the U.S. Federal Reserve raised interest rates for a 17th consecutive time but cushioned the increase with a strong signal that officials were ready to stop the tightening cycle. Each rate increase in the previous two years had come with a cue that the U.S. central bank would continue to lift borrowing costs, but at that policy meeting the Fed said any additional hikes would "depend on the evolution" of the economy. require(["medianetNativeAdOnArticle"], function (medianetNativeAdOnArticle) { medianetNativeAdOnArticle.

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