Fed: Rate hike 'warranted soon'

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U.S. Federal Reserve (Fed) said on Thursday that nearly all Fed policymakers expected another interest rate hike "likely to be warranted fairly soon".

On October 3, he said rates were "a long way" from neutral levels. He has more recently called the Fed "crazy" and "loco" over recent interest-rate increases.

Meanwhile, Fed Chairman Powell is set to speak on "The Federal Reserve's Framework for Monitoring Financial Stability" before the Economic Club of New York Signature Luncheon at 12:00 p.m. ET. He tried to dismiss as premature questions over whether the Fed would need to raise rates above neutral to a level aimed at slowing growth. "We also know that moving too slowly - keeping interest rates too low for too long - could risk other distortions in the form of higher inflation or destabilizing financial imbalances". Those decisions have drawn rebukes from Trump, who wants the Fed to focus on economic growth.

Trump adds that he is "not even a little bit happy" with Fed Chairman Jay Powell, whom he selected past year. "Not even a little bit. And I'm not blaming anybody, but I'm just telling you I think that the Fed is way off-base with what they're doing", he was quoted as saying in the report. That would bring it about to the bottom of the September range of neutral-rate estimates from 15 governors and regional Fed presidents, who gave figures from 2.5 percent to 3.5 percent. Those trends, he said, were coinciding with inflation remaining "right on target" at the Fed's goal of 2 percent annual price increases.

As for future hikes, some expressed uncertainty about the timing.

"Even if central bank policies are fully anticipated by the public, some adjustments could occur abruptly, contributing to volatility in domestic and worldwide financial markets and strains in institutions", according to the Fed report.

Trump has also singled out Powell on multiple occasions for continuing to support the rate hikes.

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Trump left immediately to board Air Force One for Washington, having spent two days attending the summit of G20 countries. China retaliated with import taxes on soybeans- a major American agricultural export- and cars and liquified natural gas.

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Hawks in his administration have also been eager to see broader changes in Chinese industrial and technology policy. "Maybe I won't have the meeting", Trump said, according to The Washington Post.

Currently, the Federal Open Market Committee forecasts three quarter-point hikes for next year after a December increase, which is virtually guaranteed.

Mr Powell's comments appear to implicitly reject arguments from President Trump that past interest rate rises have been a mistake. But the likely pace of rate increases next year remains a subject of speculation.

"There's a lot of chatter that the Federal Reserve may reduce the amount of anticipated rate hikes in the future, and perhaps sell-off some of their balance sheet and that is helping out markets", Forrest said.

But Powell's most recent words should be taken along with other recent remarks in which he showed concern for the global economic outlook.

Some market analysts treated such remarks as an indication of a possible pause in rate hikes, since the neutral rate could be used to decide a target area for the central bank to complete its normalization cycle.

In a speech Tuesday, Vice Chairman Richard Clarida suggested that the Fed would continue to strive to be "data dependent" by using the latest readings on the economy "with a healthy dose of judgment and humility" to determine its interest-rate policy.

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