In a highly anticipated speech, Powell did not directly address President Donald Trump's renewed criticism of Powell for raising interest rates, which Trump says undermines his efforts to boost the economy.
After all, the Fed's decisions on monetary policy... The rate hikes are meant to prevent the economy from overheating and inflation from accelerating.
Though they made no public comments Thursday, Chicago Fed President Charles Evans and Boston Fed President Eric Rosengren, once seen as steadfast doves, in recent months have lent their support to rate hikes, conventionally seen as a hawkish action.
"Because monetary policy acts with a lag, waiting for inflation to materialize is undesirable", the paper said. However, he pointed out that gradual rate hikes were the best way to maintain high employment levels and price stability in the US.
Powell's speech at Jackson Hole and Durable Goods Orders next on tap.
But Trump has said rising interest rates - which tends to strengthen the dollar, making United States exports more expensive - will slow the economy and offset the impact of the tax cuts he championed. That echoed a phrase that was used to describe the extraordinary steps the Fed and other central banks took after the 2008 financial crisis plunged the US and global economies into deep recessions.More news: Nazanin Zaghari-Ratcliffe reunited with daughter after temporary Iran jail release
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The Fed is very confident in the U.S. economy and Mr Powell indicated there is no intention of slowing down the Fed's rate hikes, said Chris Zaccarelli, chief investment officer at Independent Advisor Alliance in Charlotte, North Carolina.
Noting that the economy's "strong performance will continue" against a backdrop where there "does not seem to be elevated risk of overheating", Fed Chair Powell said that the "gradual process of normalization remains appropriate".
"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.
US Federal Reserve Chair Jerome Powell has reiterated that the central bank will stick to the strategy of gradual rate hikes to manage potential risks and support domestic economic recovery. "The economy is strong". In an interview with CNBC, St. Louis Fed President James Bullard said he thinks there should be no more rate hikes for the remainder of this year.
Pearce said he saw Powell's comments as signaling that the central bank will continue raising rates gradually over the next year. Real time estimates of the natural rate of unemployment were now too high, so a mechanistic approach to monetary policy would have recommended a much tighter stance in the 1990s. Unemployment is low at 3.9 per cent, and inflation, according to the Fed's preferred benchmark, is slightly above officials' 2 per cent target. Powell's remarks appear to be a response to that criticism, as was widely expected.
So, a 25 basis point rate hike in September is a done deal and the financial markets are also pricing in a 60 percent probability of another rate hike in December.