US Fed to continue gradual rate hikes to manage potential risks

Fed chairman defends interest rate hikes as Trump’s attacks show no sign of working

The Fed "has been navigating between the shoals of overheating and premature tightening with only a hazy view of what seem to be shifting navigational guides", Powell said.

USA stocks kicked off Friday's trading session on solid footing as investors digested fresh economic data and interpreted a speech by Federal Reserve chairman Jerome Powell. "He is going to talk a little plainer, acknowledge uncertainty, and fashion a policy around that". "The clear message from Fed officials is that they remain committed to their plans".

Strong Performance The Fed chairman said he expected the economy's "strong performance will continue" and as a result the Fed's "gradual process of normalization remains appropriate". "Inflation is near our 2 per cent objective, and most people who want a job are finding one", Powell said.

However, some Fed officials anxious that an escalation in current trade disputes could force the central bank to rethink its interest rate hike plans, according to the minutes of the Fed's latest monetary policy meeting. Unemployment stood at 3.9 percent in July, well below 4.5 percent that the Fed sees as consistent with full employment in the longer run.

MSCI's gauge of stocks across the globe gained 0.53 percent while its emerging market index rose 0.19 percent.

The yield curve between two-year and 10-year notes has flattened to 19 basis points, from 33 basis points at the beginning of August and 83 basis points in February, as investors price rate hikes into shorter-dated notes.

Ramaphosa: SA won't make same mistakes other countries have on land reform
Almost 90% of the land in South Africa is owned by the whites even though they make up just 10% of the population. He wrote that the "South African government is now seizing land from white farmers ".

The Jackson Hole conference has taken on a mystique since past Fed chairs, and other central bankers, have occasionally used the event to signal a change in policy.

The chairman said bringing interest rates back toward levels the the Fed sees as neutral is the safest approach to managing an economy that has raised questions about the central bank's diagnostic tools for shaping monetary policy. A slower pace of rate increases would be meant to encourage continued borrowing and spending by companies and individuals to drive economic growth. In particular, we now know that the level of the unemployment rate relative to our real-time estimate of u* will sometimes be a misleading indicator of the state of the economy or of future inflation. Talks between USA and Chinese officials in Washington over trade will continue on Thursday, although most analysts do not expect much headway to be made, with risks growing that the conflict will descend into a growth-sapping tariff war.

Those potentially explosive political conditions became evident again on Monday after Donald Trump revealed, in an interview with Reuters, his frustration with Powell for continuing the strategy of a gradual increase in Yellen's interest rates.

"He could put in some new ideas or comment on current discussions and that would move the market, but I would say the odds of that is less than 50/50", said Jim Vogel, an interest rate strategist at FTN Financial in Memphis, Tennessee. Burns did, and the move is widely believed to have helped fuel a decade of high inflation.

American presidents rarely criticise the Fed because its independence is viewed as important for USA economic stability.

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