Federal Reserve officials signaled plans to raise interest rates next month, but they appeared more tentative about maintaining a pace of quarterly increases after that, minutes of the central bank's recent policy meeting show.
The spread on euro-dollar interest rates future is negatively correlated with emerging markets as higher interest rates in the USA dim the appeal of risky assets.
After lift-off in December 2015 followed by a rise a year later, the central bank has since steadily raised benchmark rates and is widely expected to do so again in December.
"Many baby boomers like me are, however, reaching an age where a good report is, 'Well, there are a number of things we should keep an eye on, but, all things considered, you are in good health, '" he said.
Speaking at the Economic Club of NY on November 28, Jerome Powell outlined the Fed's decision to slow or pause interest rate movements in 2019 and would continue to monitor the nation's financial stability.
Minutes of the November 7-8 meeting of the Fed's rate-setting body, the Federal Open Markets Committee, show that officials expressed concerns about a variety of threats, including the impact of tariffs, a slowing global economy and tightening financial conditions amid falling stock prices.
Just on Tuesday, Fed Vice Chair Richard Clarida, in a speech to numerous same economists and investors in NY, used precisely the same language to describe the policy rate as "just below" the range for neutral.
With a December increase broadly expected, that meeting may stand out more for the fresh economic projections that policymakers will issue, providing a clearer view of how their perceptions of the economy and the proper path for rates may have changed in recent weeks. The fear of higher USA interest rates - fuelled by a surging economy - has been a key driver of a global equity sell-off over the past few months, while the dollar has soared as traders put cash into the U.S. looking for better, safer returns.
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As a result, "almost all" Fed members said a rate hike "was likely to be warranted soon".
Tucked in his speech, Powell said that rates are "just below" the so-called neutral range, the level that central bankers believe will neither accelerate nor slow economic growth - a subtle two-word shift from comments he made in October suggesting that interest rates are still "a long way" from neutral. Since then, he and other Fed officials have sounded a bit more cautious, nodding to a slowdown in Europe, Japan and China. On October 3, he said rates were "a long way" from neutral levels.
"What do you do?" said Powell in NY.
After the financial crisis erupted in 2008, the Fed kept rates at historically low levels to revive the ailing economy. Three of those increases have been under Powell. "It's ironic that a concept, the neutral rate, in which the Fed has such little confidence, has swung markets so dramatically in the past two months", Basta said.
A few officials expressed concern about rates moving too high too quickly.
Analysts think a rate hike next month is likely, but economists admit three rate increases for next year are beginning to look less certain, especially if stock market volatility increases, and consumer and business sentiment worsens in early 2019.
"There is a great deal to like about this outlook", he added.