Trump can rail against Powell, but he can't fire him

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The U.S. central bank in 2018 has hiked rates each quarter, and is expected to tighten policy again next month.

The phrase "just below" neutral might seem bland or innocuous. "Our gradual pace of raising interest rates has been an exercise in balancing risks". Earlier this week the Bank of Israel Monetary Committee raised Israel's key rate from its historic low of 0.1%, where it has been anchored since March 2015, to 0.25%, its first rate hike since June 2011.

Trump on Tuesday again blasted his hand-picked chief of the U.S. central bank, saying he was "not even a little bit happy" with his selection of Powell. The 10-year Treasury yield fell with the dollar after the release of Powell's speech in NY.

Mr Trump has criticised Mr Powell repeatedly this year, saying that the base rate is unnecessarily high and risks curtailing an economic boom in the US.

He said that while there was "a great deal to like" about United States prospects, the Fed's gradual interest-rate hikes are meant to balance risks as it tries to keep the economy on track. "We already passed that, as the housing market shows", he said on CNBC, referring to this year's steady decline in home sales and construction - something analysts partly blame on higher mortgage rates.

Trump directly criticized Powell, whom he appointed as Fed chairman. "Almost all participants expressed the view that another increase in the target range for the federal funds rate was likely to be warranted fairly soon" if employment and inflation remain in-line or stronger than the Fed's current expectations, the minutes said.

"Interest rates are still low by historical standards, and they remain just below the broad range of estimates of the level that would be neutral for the economy - that is, neither speeding up nor slowing down growth", Powell said during a speech at the Economic Club of NY.

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"I'm doing deals, and I'm not being accommodated by the Fed", he said in an interview with the Washington Post.

"As always, our decisions on monetary policy will be created to keep the economy on track in light of the changing outlook for jobs and inflation", Powell said.

"I don't see this month's reading as a reason to step away from normalizing policy or change their overall view of the US economy".

For example, he didn't discuss how recent changes to the economic outlook - including weaker housing sales, rising market volatility and a plunge in oil prices - might influence the Fed's policy path.

Faced with this barrage of criticism, Mr Powell appears to be taking a more dovish line, which is why all of the main USA stock indices rose sharply on Wednesday night.

The speech was "a reassuring message from a market perspective because it removes concerns of a Fed dead set on tightening up to a point where rates would intentionally slow down the economy", he added.

Still, he judged the area posed little systemic risk, labeling broader, overall risks to financial stability as "moderate".

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