Powell says he would not resign as Fed chair if Trump asked

Powell says he would not resign as Fed chair if Trump asked

Federal Reserve Chairman Jerome Powell signaled the central bank could pause interest-rate increases if the U.S. economy weakened and pledged he will stay at his post even if President Donald Trump presses him to resign. That flexibility, he added, applied as well to the monthly reductions to the Fed's balance sheet.

"As always, there is no preset path for policy", Powell said, according to CNBC.

That robust figure, however, will not as of now change the Fed's plan to conduct two rate hikes this year, as the central bank awaits more economic indicators coming in the next few months.

Compared to comments he made after the Fed raised rates last month, "it's not that he's changed his message. but that he explained it more patiently and in greater detail", said Lou Brien, market strategist at DRW Trading in Chicago.

Wall Street, which opened sharply higher after a report showing 312,000 jobs gained in December, surged even higher during Powell's appearance.

The Dow Jones Industrial Average climbed 746.94 points (3.29 per cent) to end the week at 23,433.16.

Trump has complained that the Fed has pushed rates higher despite the fact that there is no evidence that inflation was getting out of control.

Powell also said the Fed is monitoring the financial markets despite criticism from some analysts that the central bank was ignoring the market's recent heightened volatility.

Trump would appear to be on shaky legal ground if he tried to fire Powell.

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Jerome Powell, chairman of the US Federal Reserve. Courts in cases that involved other agencies have interpreted that language to not cover policy differences.

When asked whether he would comply with a resignation request by Trump, Powell said, "No".

Powell's willingness to be flexible on interest rates was welcome news to investors, many of whom anxious that Fed chair risked cutting off the current economic expansion by continuing to raise interest rates despite signs the USA economy was cooling off a little. "Can we wait?", Cleveland Federal Reserve Bank President Loretta Mester said in an interview with Reuters.

The Fed, which hiked benchmark US interest rates four times previous year including in December, is however not on a preset path and could pause policy tightening as it did in 2016 when global growth concerns led to doubts about the USA economic recovery, he said.

"With the muted inflation readings that we've seen, we will be patient as we watch to see how the economy evolves", Powell said Friday on a panel with his predecessors Janet Yellen and Ben Bernanke at the American Economic Association's annual meeting in Atlanta.

"Powell's more dovish tone supports our expectation for only one rate hike in 2019, followed by a pause through 2020", economists Mickey Levy and Roiana Reid at Berenberg Capital Markets wrote in a note to clients. But some investors have anxious that that process could push long-term rates higher at a time when the economy was slowing.

In response to questions, Powell also signaled a willingness to include changes to the Fed's gradual run-off of its balance-sheet in any review of monetary policy.

U.S. media reported that Trump has been asking his advisers whether he could remove Powell from the post.

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