In testimony before the Senate Banking Committee, Powell on Tuesday offered a positive outlook of the USA economy and reiterated that gradually raising interest rates is "the best way forward". Powell again tried to avoid criticizing President Donald Trump's get-tough policies while endorsing free trade.
Powell is appearing before Congress for the second day to deliver the Fed's mid-year report on the economy and monetary policy.
"His takeaway was the job market is strong, inflation is going to stay near 2 percent. On the other hand, if we raise rates too rapidly, the economy could weaken and inflation could run persistently below our objective", Powell testified before the Senate Banking Committee.
The two-year Treasury yield, most sensitive to the market's views on changes in Fed policy, has risen to a decade-high.
The dollar gained 0.43 percent against sterling as the United Kingdom currency was dragged to 10-month lows on weak inflation data and uncertainty over Britain's plans to leave the European Union.
Sterling remained frail against the dollar and euro on Thursday, trading near multi-month lows against both units hit overnight.
China could end USA tariffs "this afternoon by providing a more satisfactory approach" and taking steps that other countries are also calling for, Kudlow said.
Sens. Jon Tester of Montana and Heidi Heitkamp of North Dakota, two Democrats up for re-election this year in states Trump carried, were highly critical of the tariffs. "From this context the impact on the broader economy, inflation and therefore the stock markets should be limited", said Soichiro Monji, senior economist at Daiwa SB Investments in Tokyo.More news: Leicester City sign Wales goalkeeper Danny Ward from Liverpool
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In Novermber 2017, Powell acknowledged that "in the long, long run, cryptocurrencies and things of that nature could matter", adding that blockchain could be something that "may have significant applications in the wholesale payments part of the economy". "If that is where this goes, we don't know where it would lead". "If it results in higher tariffs, that would be bad for our economy".
Powell cited trade and tax legislation as among the uncertainties that could alter his forecast.
While painting a positive picture about the U.S. economy, Powell acknowledged that it was "difficult to predict the ultimate outcome of current discussions over trade policy", a clear reference to the aggressive tariff policies adopted by President Donald Trump against China and many USA trading partners.
Manufacturers in every one of the Federal Reserve's 12 districts anxious about the impact of tariffs, a Federal Reserve report said on Wednesday, even as the USA economy continued to expand at a moderate to modest pace.
But he disagreed, saying the annual stress tests to determine if the nation's biggest banks could survive a severe recession were tougher than ever. Gold slumped to a year low before rebounding.
The Fed has lifted its key policy rate twice this year.
The central bank's preferred inflation measure rose 2.3 percent in the 12 months ended in May, up from 1.5 percent a year earlier.