US Fed chairman Powell hints at higher rates following Trump attack

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US Fed chairman hints at higher rates following Trump attack

On October 3, he said rates were "a long way" from neutral levels.

"Participants also commented on how the Committee's communications in its post-meeting statement might need to be revised at coming meetings, particularly the language referring to the Committee's expectations for "further gradual increases" in the target range for the federal funds rates", the minutes said.

Nearly all Federal Reserve officials at their last meeting agreed another interest rate increase was "likely to be warranted fairly soon", but also opened debate on when to pause further hikes and how to relay those plans to the public. The minutes showed a couple of participants felt the benchmark fed funds rate "might now be near its neutral level and that further increases in the federal funds rate could unduly slow the expansion of economic activity".

"I'm doing deals, and I'm not being accommodated by the Fed", Trump said in the interview.

If the Fed, as expected, raises the fed-funds rate next month to a band between 2.25% and 2.5%, that would leave it touching the bottom of the range of neutral estimates but four more quarter-percentage-point increases from the top.

In recent weeks, U.S. President Donald Trump has repeatedly attacked the Fed - and Powell personally - for their rate increases, which the president has blamed for any economic weaknesses or stock market turmoil. His predecessors in the White House took care not to directly or publicly attack the central bank's rate policy. Investors interpreted his remarks as evidence that the Fed might consider pulling back from quarterly rate hikes.

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"What a difference having a written and carefully vetted speech makes with respect to speaking freely and without a script, " Roberto Perli, a former Fed economist and partner at Cornerstone Macro LLC in Washington, told clients on Wednesday.

No, Mr Powell has blinked in the face of some unpleasant personal attacks from Mr Trump. "But I think they are overpriced", he said.

For example, he didn't discuss how recent changes to the economic outlook - including weaker housing sales, rising market volatility and a plunge in oil prices - might influence the Fed's policy path. Trump tapped Powell previous year to be Fed chairman after he decided against giving Janet Yellen a second term. But Bush's complaint about the Fed occurred years after he had left office.

Stocks and interest-rate futures jumped, even while economists wrestled to interpret whether Powell meant to send a message or was simply misunderstood. The minutes said that Fed contracts in agriculture said that conditions "remain depressed", reflecting in part the drop in exports due to the trade battle.

While campaigning for president in 2016, Trump had been critical of the Yellen Fed, contending that under her, the central bank was keeping rates abnormally low to try to help Democrats.

But in discussing his choice of Powell a year ago, Trump said Tuesday: "Look, I took recommendations".

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