Dow surges after Fed chair hints of limit to rate hikes
Federal Reserve chairman Jerome Powell praised the “strong” U.S. economy in a speech Wednesday, sending stock markets higher after seeming to forecast an eventual end to the central bank’s series of interest-rate hikes the past three years.
“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, according to prepared remarks.
Stock markets immediately soared on the statement, which investors interpreted to mean that the central bank would slow down its rate hikes over the next year or so. The Dow gained 240 points shortly after the text of the speech was posted online at noon, jumping to 25,192.
Starting in 2008, the Fed cut its key interest rate to near zero to boost economic growth in the wake of the worst economic slowdown since the Great Depression. It started to modestly raise rates in 2015 and then in earnest in 2016. The most recent hikes have drawn the ire of President Donald Trump, who hasthe man he named last year to chair the Fed for apparently undermining Mr. Trump’s economic policy.
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