Fed's Powell: Best way forward is to keep raising rates

Daniel Fowler
July 22, 2018

The dollar, in which gold is priced, gained against a basket of currencies during the testimony, making gold more expensive for non-U.S. investors.

Having said all that, Powell concluded that we live in a time of extraordinary technological change and regulators should be open to new ideas and innovations that will drive economic growth and improvements in the financial system.

The Fed raised rates in June and policymakers have indicated they expect two more increases this year.

"Trade is really the business of Congress, and Congress has delegated some of that to the executive branch", Powell said.

Silver futures for September were lower by $0.037 or 0.24% at $15.580 an ounce and Copper was up $0.017 or 0.62% at $2.764 per pound. In contrast, he said that nations that have taken a more protectionist direction have not fared as well.

Lower tariffs would be a good thing for the United States economy, he said. "We know that. It is not a good thing if this is where it goes". "From this context the impact on the broader economy, inflation and therefore the stock markets should be limited", said Soichiro Monji, senior economist at Daiwa SB Investments in Tokyo.

Oil prices had dropped by 4 per cent yesterday crude export terminals in Libya reopened and exports from other OPEC countries and Russian Federation improved.

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The words "tariff" or "tariffs" have appeared dozens of times in the three Beige Books published since April, including 31 references in the July report released on Wednesday, compared to 20 times overall in the prior two decades of reports.

Powell will testify on the economy and monetary policy before the U.S. Senate Banking Committee on Tuesday, followed by an appearance on Wednesday at the House of Representatives Financial Services Committee.

Global trade tensions have not driven investors to purchase gold, traders said. "The line that Powell tried to walk seems at odds with the heightened uncertainty".

To the extent wages are not growing as fast as might be expected, Powell said continued low unemployment could help, but urged lawmakers to think about longer-term policies such as improved education that will ultimately drive outcomes for workers. "The real debate is about rate hikes next year", Cole said.

Netflix shares ended up paring their losses from 14% in after hours trading to a loss of 5% against Monday's close, while its FANG compatriots Facebook (FB), Amazon (AMZN), and Google parent company Alphabet (GOOGL) each logged new record highs.

The dollar strength also played out in weaker commodity prices, with the platinum price dropping to its weakest level since 2008, casting a shadow on the struggling platinum producers.

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