Fed Chair Jerome Powell says he would not resign if asked

Jerome Powell

Federal Reserve Chairman Jerome Powell on Friday moved to ease concerns in financial markets, saying that while USA economic momentum is solid, the central bank is sensitive to the risks highlighted by investors and will be patient with its monetary policy in 2019.

"With Chairman Powell's remarks today, I would say they will do just one hike or maybe no hikes this year", said Sung Won Sohn, chief economist at SS Economics. Markets, however, have mostly tumbled since October on fears of a global economic slowdown and the ongoing U.S.

Powell gave as an example the fact that in 2016, when Janet Yellen was Fed chair, the central bank began the year with a projection that it would raise rates four times that year but ended up raising rates only once because the economy hit a soft-patch. Sliding equity prices, weakness overseas and mixed economic data at home have prompted calls for the Fed to put rates on hold, but the United States labor market remains strong. Earlier in the day, the euro zone single currency fell as low as $1.1347 against the dollar after the dollar rose following data that showed USA employers hired the most workers in 10 months in December while boosting wages. "They can be patient". A third Fed president, Thomas Barkin of Richmond, said he is hearing more concerns about economic risks and trade. "And particularly with muted inflation readings that we've seen coming in, we will be patient as we watch to see how the economy evolves". "We don't believe our issuance is an important part of the story of the market turbulence that began in the fourth quarter a year ago".

Powell's appearance in Atlanta was his first since last month's rate increase and a public lashing from Trump, who according to sources asked aides about his power to fire the Fed chairman.

"If the President asked you to resign, would you do it?"

The head of the Fed, once confirmed by the Senate, can only be removed "for cause", not a policy disagreement.

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He also defended his independence, saying he would not resign if requested Donald Trump asked. American presidents of the past quarter-century have kept private their opinions about Fed policy so the Fed can focus on employment and inflation rather than feel pressure from the short-term wishes of politicians.

Her comments, from a sometimes hawkish Fed official, highlighted the change in tone at a central bank that, after two years of roughly quarterly rate increases, was now assessing the risks of going too far.

The Fed has a long history of nonpartisanship saying,"it's had a very strong culture around nonpolitical activity", said Powell.

Speaking after months of volatility in world bond and stock markets, Powell avoided some of the communication missteps that in the past have roiled rather than calmed investors.

This story has been published from a wire agency feed without modifications to the text.

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