Federal Reserve Chief Says 'No' He Won't Resign If Trump Asks

Federal Reserve Chief Says 'No' He Won't Resign If Trump Asks

Wall Street stocks surged higher on Friday (Jan 4) to finish a volatile week on an upbeat note following dovish Federal Reserve comments and a strong USA jobs report.

In remarks to the American Economic Association, Powell soothed market nerves with assurances that the central bank is sensitive to risks that worry investors and is not on a preset path of interest rate hikes.

The Dow finished up 3.3 percent, or almost 750 points, to end the week at 23,433.16, more than making up for the 2.8 percent slide on Thursday amid worries over slowing growth. Powell also told the outlet that, even if he's asked, he will not resign.

The main catalysts for the surge were the monthly US payrolls report, which blew past economists' forecasts with the largest number of jobs created in 10 months, and comments by the Fed's Powell.

He added that the USA central bank would not hesitate to adjust its balance sheet reduction plan if it causes problems in the markets.

Here's a run-down of the data that have - and haven't - changed since the Fed chief briefed the media on December 19 after policy makers raised rates and signaled two more hikes in 2019. Under the law that governs the Federal Reserve, a president can only remove a Fed chairman for cause.

Powell called the jobs report "very strong", with US data "on track to sustain good momentum into the new year". "Average hourly earnings moved up and that's quite welcome and also for me at this time does not raise concerns about too-high inflation", he said. "But what I do know is that we will be prepared to adjust policy quickly and flexibly and to use all of our tools to support the economy should that be appropriate to keep the expansion on track".

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That's enough to make Powell's colleague in Texas, Dallas Fed President Robert Kaplan, argue for putting rate increases on hold for the first couple of quarters of 2019. Powell made the comments while speaking on a panel in Atlanta that included former Fed chiefs Janet Yellen and Ben Bernanke.

The pace of Fed rate hikes and the lowering of the balance sheet, which tends to put upward pressure on interest rates, had both been concerns of investors in recent months.

Trade uncertainty and concerns about global growth seem to be an important factor in the recent US weakness: tariff worries have surfaced repeatedly in Fed surveys.

Powell's Fed hiked rates four times past year and projections from its December 19 meeting show officials expect two more hikes in 2019.

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. The Fed increased its balance sheet to a peak of around $4.5 trillion before it ended the QE program but continued reinvesting the proceeds from maturing bonds.

Asked if any future meeting with Trump was scheduled, Powell said, "I have no news on that".

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