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Economic ‘crosscurrents’ sink Fed plans to raise interest rates. Here’s what’s worrying Powell and crew

Economic ‘crosscurrents’ Sink Fed Plans To Raise Interest Rates. Here’s What’s Worrying Powell And Crew paper is one as regards these Finance, Forex categories, written much as our reporter Erick Emerson by January 31, 2019, those blogpost can search much as these tags crew, crosscurrents, economic, Fed, Heres, interest, plans, Powell, raise, rates, sink, whats, worrying. We're joyful to satisfied you along with providing that another paper reffering finance and we always publishing this paragraph daily.

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Economic “crosscurrents” have put the Federal Reserve on ice. The central bank is worried enough about the economy that it won’t raise U.S. interest rates again soon.

The Federal Reserve has indicated it might be done raising interest rates — and Wall Street can thank economic “crosscurrents for that.

Read: ‘Patient’ Fed takes wait-and-see stance as worries about economy grow

Fed Chairman Jerome Powell, in a swift and stunning reversal, said on Wednesday the case for higher U.S. interest rates “has weakened.” Just last month, the Fed raised interest rates and signaled it would do so again in 2019.

The Fed’s change of heart triggered a sharp rally in stock markets

DJIA, -0.20%

SPX, +0.74%

and sent bond yields

TMUBMUSD10Y, -1.40%


Powell attributed the central bank’s new-found caution on raising rates to what he referred to more than a half-dozen times as “crosscurrents.” Just what does he mean by that?

On the positive side, inflation remains low and the U.S. has the best labor market in decades.

The economy added 2.6 million new jobs in 2018 while the rate of layoffs and unemployment fell to a 50-year bottom. Households are spending at a healthy pace and businesses are doing their part, too.

Read: U.S. added 213,000 private-sector jobs in January, ADP says

The “cross” part of crosscurrents is mainly coming from overseas. Powell pointed out that “growth has slowed in some major foreign economies, particularly China and Europe.”

He also cited the festering trade dispute between the U.S. and China and a messy attempt by the U.K. to exit the European Union, a policy known colloquially as Brexit.

There’s some warning signs in the U.S., too.

“Financial conditions tightened considerably in late 2018,” said Powell, alluding to a then-surge in U.S. interest rates and ensuing plunge in U.S. stock markets.

Surveys of consumers and businesses also show less optimism than they did just a few months ago, he said.

Read: Consumer confidence falls to 18-month low due to government shutdown

Also Read: Chicago economy grows at slowest pace in 2 years and not just because of cold snap

Although U.S. interest rates have tumbled over the past month and stocks have rebounded strongly, Powell said the crosscurrents aren’t going to disappear anytime soon.

Hence the Fed’s new “patient,” wait-and-see strategy.

“We think these crosscurrents, these risks, will be with us for a while,” Powell said.

Related: Trump couldn’t get his border wall but is getting a sea of Fed liquidity

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