Decision today: Is Trump all set to pick Jerome Powell as next Fed chair?

President Donald Trump has informed Federal Reserve Governor Jerome Powell that he is the pick to replace Janet Yellen at the helm of the central bank, a media report said on Wednesday.

The Wall Street Journal report quoted two people familiar with the matter as saying Trump spoke to Powell yesterday to inform him of the decision.

If confirmed by the Senate, Powell would take over from Yellen when her four-year term as Fed chair expires in February. Powell has already been through that confirmation process in order to become a member of the Fed's board.

Yellen was a potential, though dark horse candidate, and earlier in the day Trump praised her as "excellent." But he has made clear in all his appointments he wants to put his own stamp on policy.

The choice marks the first time since Jimmy Carter's administration in the 1970s that a president has failed to reappoint the Fed chair named by his predecessor.

After months of public debate, analysts say Powell represented a middle-ground option for the president, who wanted to mark a departure from the Obama era, while markets prefer continuity and favoured Yellen who has presided over an era of low inflation and steady economic growth.

An attorney by training who has voted with the majority of Fed members since his appointment by Barack Obama in 2012, Powell was seen as a centrist, unlikely to pursue steep rate hikes but a probably more amenable to the Trump administration's deregulation agenda.
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Gold climbs ahead of US Fed Reserve meet, pick for Janet Yellen replacement

Gold climbed briefly back above $1,280 an ounce on Wednesday as caution ahead of this week's confirmation of the new Federal Reserve chair and a policy statement from the bank prompted some to close out bets on falling prices.

Fed Governor Jerome Powell is widely tipped to take over from incumbent Janet Yellen at the head of the U.S. central bank next year. He is seen as a less hawkish and therefore more gold friendly choice than his main challenger John Taylor, a Stanford University economist.

A statement at the end of the Fed's latest policy meeting due later will also be closely watched for clues on the outlook for U.S. interest rates. While the bank is expected to leave rates unchanged, investors will be watching for any indications that it will press ahead with another increase next month.

Spot gold was up 0.5 percent at $1,278.11 an ounce at 1035 GMT, having earlier peaked at $1,280.87. Its upward move accelerated after it broke through its 100-day moving average at $1,275 an ounce, a key chart level.

The metal has fallen for the last two weeks as the dollar has strengthened, taking it to a three-week low on Friday. While prices have recovered, they remain within a less than $15 an ounce range so far this week as traders await clarity on U.S. monetary policy.
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Donald Trump may name Jerome Powell as next Fed Chair: Bloomberg

US President Donald Trump is leaning toward nominating Federal Reserve Governor Jerome Powell as the next leader of the central bank, Bloomberg News reported on Friday.

Citing three people familiar with the matter, Xinhua reported that the decision isn't final and Trump could change his mind at any time.

Trump has recently finished interviews of five candidates for the next Fed Chair, including Powell, Stanford University economist John Taylor, former Fed governor Kevin Warsh, White House National Economic Council Director Gary Cohn and current Fed Chair Janet Yellen, whose term expires next February.

Trump said on Monday that he was "very, very close" to making a decision on who is going to lead the central bank.

Trump's advisors have been steering him toward choosing either Powell or Taylor for the job. Powell is favoured by Treasury Secretary Steven Mnuchin, while Taylor is favoured by Vice President Mike Pence.

While Powell and Taylor are both Republicans, they would have much different approaches to running monetary policy at the central bank.

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Watching inflation closely but economy is strong, says Janet Yellen

The US economy remains strong and the strength of the labour market calls for continued gradual increases in interest rates despite subdued inflation, Federal Reserve Chair Janet Yellen said on Sunday.

"We will be paying close attention to the inflation data in the months ahead," Yellen said in prepared remarks at an international banking seminar in Washington. "My best guess is that these soft readings will not persist."
Yellen also said she expected the US economy to exceed its long-term trend during the second half of the year and repeated the impact of recent hurricanes on the economy should be temporary.

The US central bank voted to hold interest rates steady at its last policy meeting in September. Since then, Yellen has repeatedly acknowledged rising uncertainty on the path of inflation, which has been retreating from the Fed's 2 percent target rate for much of the year.

Minutes from the meeting, released last Wednesday, showed policymakers had a broad debate about recent soft inflation and the impact on interest rates if it fails to rebound.

However, Yellen and some other key policymakers have also made plain they expect to continue to gradually raise interest rates given the strength of the overall economy and continued tightening of the labour market.
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China's dollar bond maturities could haunt Fed policy meetings

In September 2015, the United States (US) Federal Reserve cited risks from China as a key reason for delaying its first interest rate hike in a decade. A wall of Chinese debt maturing in the next few years could jolt the country back into the US central bank's policy deliberations.

Two years ago, it was a collapse in Chinese stocks, a surprise yuan devaluation and shrinking foreign exchange reserves that roiled financial markets that delayed the Fed, but it did raise rates three months later and has tightened further since.

Now, some see risks emerging in China's dollar-denominated bonds that could give the Fed greater pause for thought as it raises rates, even as other central banks signal a shift from ultra-easy policy.

To be sure, Fed officials have not publicly flagged China's debt as a major risk in their policy discussions. However, debt analysts point to the possibility of another September 2015 moment in which the Fed takes its cues from concerns about China.

"Back then, I said that US monetary policy is not made in Washington, it's made in Beijing," said Joachim Fels, global economic advisor at bond giant PIMCO.

"China does have a major impact on monetary policies elsewhere ... This year has been smooth sailing for global central banks because there were no shockwaves from China but I expect that to change if we think beyond the next few months."
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Trump's 3% target for US growth quite challenging in coming years: Yellen

It would be "quite challenging" for the United States to reach the 3 percent growth target set by President Donald Trump, Federal Reserve Chair Janet Yellen told a Senate panel on Thursday in a hearing focused on regulatory reform and a discussion of lagging productivity.

Trump has pledged to boost annual growth to 3 percent, the average for much of the last 70 years, and predicated an earlier tax plan on reaching that figure.

The Fed, the Congressional Budget Office and others feel that an ageing population and lagging productivity mean the economy's potential has downshifted to around 2 percent growth or less - a fact that has profound effects on national wealth as the slower pace compounds over time.

"I think it is something that would be wonderful if you could accomplish it," Yellen said at a Senate committee hearing. "I think it would be quite challenging," and require a broad set of changes from tax reform to an improved education system that adds to labour productivity.

Yellen's appearance before the Senate Committee on Banking, Housing and Urban Affairs covered much of the same ground as her session with a House committee on Wednesday where she said the Fed's plans for further gradual rate increases and a slow drawdown of its balance sheet remain on track.
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Wall Street records fresh highs on Yellen's rate hike views at testimony

US stocks opened higher on Wednesday after Federal Reserve Chair Janet Yellen said interest rates hikes would be gradual and will not have to rise much further to reach neutral rate.

Yellen, in a prepared testimony to be delivered to Congress at 10 a.m. ET (1400 GMT), said the economy is healthy enough to absorb further gradual rate increases and the slow wind down of the Federal Reserve's massive bond portfolio.

The testimony depicted an economy that, while growing slowly, continued to add jobs, benefited from steady household consumption and a recent jump in business investment.

Investors and some Fed officials, concerned with the recent dip in inflation, have been wanting to see a surer progress toward the central bank's goal of 2 percent inflation.

Yellen ascribed the inflation drop to "a few unusual reductions in certain categories of prices" and said it would eventually drop out of the calculation.

"I'm not very surprised by Yellen's comments. She's been pretty steadfast that we're raising rates... The market is liking the fact that she's seeing economic growth," said Paul Nolte, portfolio manager at Kingsview Asset Management in Chicago.

"What the Fed's doing and she's doing is continuing the case for raising rates."

The U.S central bank will also issue its Beige Book at 2 p.m. ET, a compendium of anecdotes on the health of the economy. The Fed's next policy meeting is on July 25-26.

At 9:38 a.m. ET, the Dow Jones Industrial Average was up 133.61 points, or 0.62 percent, at 21,542.68, the S&P 500 was up 16.18 points, or 0.66 percent, at 2,441.71.
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Fed raises rates by 25 bps: What it means for inflation and labour market

The Federal Reserve has raised the interest rates at which banks borrow by 25 basis points to 1.12 per cent on Wednesday for the second time in three months, brushing off a recent run of mixed economic data. It forecasted one more hike this year.
The Fed has now raised rates four times as part of a normalisation of monetary policy that began in December 2015. The central bank had pushed rates to near zero in response to the financial crisis.

What reasons did the Federal Reserve cite?

1. The US central bank's rate-setting committee said the economy had continued to strengthen, job gains remained solid and indicated it viewed a recent softness in inflation as largely transitory.

2. The Fed also gave a first clear outline on its plan to reduce its $4.2 trillion portfolio of Treasury bonds and mortgage-backed securities, most of which were purchased in the wake of the 2007-2009 financial crisis and recession.

3. It expects to begin the normalisation of its balance sheet this year, gradually ramping up the pace. The plan, which would feature halting reinvestments of ever-larger amounts of maturing securities, did not specify the overall size of the reduction.

What is the initial cap?

The initial cap for the reduction of the Fed's Treasuries holdings would be set at $6 billion per month, increasing by $6 billion increments every three months over a 12-month period until it reached $30 billion per month.

For agency debt and mortgage-backed securities, the cap will be $4 billion per month initially, rising by $4 billion at quarterly intervals over a year until it reached $20 billion per month.
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Sensex down over 150 points; Broader markets fall 1%

Latest News - Benchmark indices extended losses even as Asian markets rallied after the US Federal Reserve Chair Janet Yellen hinted at a likely rate hike in the forthcoming policy review.

At 1:19 pm, the S&P BSE Sensex was trading at 28,162, down 177 points, while the broader Nifty50 was ruling at 8,729, down 63 points.

In the broader market, BSE Midcap and BSE Smallcap lost 1.2% and 1.4%, respectively.

"Nifty is well placed above the 8,770 levels indicates strength and has a potential to test 8,840- 8,870 levels in coming trading sessions," said Nirmal Bang research in a technical note.

On Tuesday, foreign portfolio (Read More)