Fed 'open' to more than one Libor replacement - Powell

Market-based Inflation Expectations

Market-based Inflation Expectations

Repeating his mantra that the economy is in "a good place" and "performing well", the chairman brushed off fears of the coronavirus.

Federal Reserve Chair Jerome Powell told Congress on Tuesday that the US economy is in a good place, even as he cited the potential threat from the coronavirus in China and concerns about the economy's long-term health.

On Capitol Hill for a second day to deliver his twice-a-year economic update, Powell told a Senate panel he's watching different parts of the economy for any possible impact, starting with US factory floors that rely on parts from Chinese factories temporarily shut because of the outbreak.

Powell was speaking before Congress on Tuesday.

"Housing is generally facing difficulties in affordability, Powell said".

'There is very little central banks can do when both short- and longer-term rates are near zero, said Mark Spindel, a co-author of a book about the Fed's relations with Congress.

Powell said that the Fed had two tools to fight a recession - quantitative easing, which involves large purchases of assets, and forward guidance, which means communicating with the markets about the likely future course of interest rate policy.

Many Representatives asked about climate change.

"It's critical to have diverse perspectives", Powell said.

After three reductions a year ago, the Fed's target for short-term interest rates now stands at 1.5% to 1.75%, less than half the 500 basis points in cuts it has made to fight past downturns.

House Judiciary Committee says Barr has agreed to testify
And I want to thank, if you look at what happened, I want to thank the Justice Department for seeing this, this frightful thing. Zelinsky, Adam Jed and Michael Marando-requested to withdraw from the proceedings, with one resigning from the department.

Powell defended himself when questioned about the optics of attending a party thrown by Jeff Bezos after the annual Alfalfa Club dinner, which Trump family members attended, saying he didn't speak to any of them and was there with his son and his new daughter-in-law.

NEW YORK, Feb 12 (Reuters) - All three major US stock averages reached record highs on Wednesday as news that the dreaded coronavirus could be running out of steam kept buyers in the ring.

Harker said he believes the US economy is in good shape and that the Fed should maintain its current interest rate policy of "wait-and-see".

On the other hand, weakness in Eurozone Industrial Production continued flashing dimming prospects that the European Central Bank is nearing the reversal of its ultra-lose monetary policy.

Continued job gains and rising wages should boost consumer spending this year, despite soft business investment. RBC said a potential shock to demand from the coronavirus could hurt commodity prices.

Financial sector advanced 1.8%, with financial major Commonwealth Bank of Australia closed at a almost five-year high after posted a better-than-expected half-year profit and said it was looking to return capital to shareholders. The Fed said in the report that the current stance of monetary policy was appropriate as downside risks to the US economy had receded.

"The answer to all three questions", he said, "is, 'Let's wait and see'".

The yield on Australia's benchmark 10-year note, which moves inversely to its price, jumped 4-1/2 basis points to 1.086 percent, the yield on the long-term 30-year bond also surged 4-1/2 basis points to 1.675 percent and the yield on short-term 2-year gained almost 3 basis points to trade at 0.776 percent by 04:40GMT.

"We will use those tools", Powell said.

Powell's remarks suggest the Fed is inclined to keep things where they are, barring any major disruptions. But that is exactly what we will need to do.

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