Federal Reserve Chair To Tread 'Carefully' On Rates Amid Uncertainty

Jerome Powell, the chair of the Federal Reserve, hinted that the US central bank is inclined to keep interest rates unchanged at its upcoming meeting while keeping the door open for a future increase if decision-makers observe additional signals of sustained economic growth.

The remarks essentially confirm market predictions that the Fed will refrain from raising interest rates for a second consecutive meeting on October 31 and November 1, according to a Bloomberg report.

A recent increase in long-term Treasury rates, if it continues, may reduce the need for additional raises 'at the margin,' the Fed president added, echoing his colleagues and highlighting the significance of tightening financial conditions to the rate forecast in the months to come.

Given the uncertainties and risks, and how far we have come, the committee is proceeding carefully,” Powell said Thursday at the Economic Club of New York. “We will make decisions about the extent of additional policy firming and how long policy will remain restrictive based on the totality of the incoming data, the evolving outlook, and the balance of risks.”

After Powell spoke, the yield on two-year treasuries declined, while the yield on 10-year treasuries pared an increase that pushed it near the 5 per cent mark. The dollar fell against a basket of major currencies, and the S&P 500 index of stocks, after multiple twists and turns, fell.

After protesters disrupted the New York event, Powell was momentarily removed out of the room before starting his speech. Before Powell came back on stage, the protesters who were standing arm in arm and screaming 'end fossil finance' were forcibly removed.

Last month, officials maintained their policy rate in the range of 5.25 per cent to 5.5 per cent, and their projections indicated that 12 of the 19 officials wanted one more increase this year. Powell took cautious in his speech to not completely rule out the potential of additional tightening.