Shift to Neutral Policy Not to Too Far Away, Says Fed President

“If you asked me today I’d probably pick” the middle of the range, about 2.7 percent,” Daly said.

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Can Trade Wars Derail Rate Hikes?

Interest rates have been a hot button topic, particularly as U.S. President Donald Trump is content with stoking the fires with his public discontent for rising interest rates. After September’s announcement, Fed Chairman Jerome Powell proceeded to receive a battery of questions regarding the health of the broad economy, but in particular, he also had to address the trade wars, particularly between the United States and China.

Market analysts are prognosticating that an escalation in the trade wars could give pause to the Fed’s current rate-hiking policies moving forward as they could potentially stymie economic growth. However, despite the growing concerns of trade wars, Powell said its wide-ranging effects have yet to penetrate the economy and cause any disruptions.

Powell mentioned that loss of business confidence could reduce investor capital and the long-term effect on the financial markets are reasons that could bring trade wars under heavier scrutiny by the Fed. However, without hard data to substantiate these concerns as a result of the trade wars, Powell could not definitely say that tariffs are to be dealt with head on just yet.

“Until we see it in the numbers, it’s hard to say how one would react,” said Powell.

For more trends in fixed income, visit the Rising Rates Channel.