Published: Sat, January 05, 2019
Money | By Ralph Mccoy

Wall Street rallies on Powell comments, jobs report

Wall Street rallies on Powell comments, jobs report

USA stocks surged to over two-week highs on Friday after a robust report pointed to sustained economic strength and Federal Reserve Chairman Jerome Powell suggested the central bank would be flexible with monetary policy.

Asked if he would resign if Trump asked him to do so, Powell responded with a short "no".

"No", the Fed chief replied succinctly.

"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.

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. Fed watchers have said that the bar is very high for the president to remove Powell "for cause" as the law appears to require, provided Powell decides to fight the dismissal in court.

Trump picked Powell to head the Fed in February.

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While Trump has sent out a number of tweets criticizing Powell and calling the Fed the biggest threat to the economy, Powell said that he had not received any direct pressure from the White House.

Speaking after months of volatility in world financial markets, and just hours after a monthly jobs report suggested the USA economy remained robust, Powell's soothing comments initially pushed stock indexes higher. Data released earlier on Friday showed United States employers added the most workers in 10 months as wage gains accelerated. Wages and labor force participation both rose, signaling sustained economic strength.

Jerome Powell, chairman of the US Federal Reserve.

The world's biggest economy expanded well above potential last year and, along with USA consumers, is expected to remain strong through this year. That suggests the Fed won't tighten again in March, she said. But it has been gradually reversing that stance over the past year, although the balance sheet still remains above $4 trillion.

Mr Powell said he thought the recent market declines reflected concerns about slowing global growth and trade tensions - but are "well ahead of the data".

"We're listening with - sensitively to the message that markets are sending and we'll be taking those downside risks into account as we make policy going forward".

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