Federal Reserve Chairman Jerome Powell signaled the central bank could pause interest-rate increases if the United States economy weakened and pledged he will stay at his post even if President Donald Trump presses him to resign.
However, after weeks of volatility in the bonds and stock market, Powell appeared to be more cautious regarding the choice of words while making the statement and he seemed to be sympathetic, as he had been quoted saying that the Fed was listening to the market outcry and they would balance the flow of strong economic data against the risks.
"We are always prepared to shift the stance of policy and to shift it significantly" if needed, Powell said, speaking on a panel alongside former Fed chiefs Janet Yellen and Ben Bernanke.
In response to the observation that the Treasury issues more securities when the Fed's balance sheet holdings mature, Powell said, "We don't believe our issuance is an important part of the story in the market turbulence that began in the fourth quarter of a year ago".
Powell also addressed the issue that the central bank was overusing interest rate policy in an effort to prevent the economy from overheating.
The Dow finished up 3.3 percent, or almost 750 points, to end the week at 23,433.16, more than making up for the 2.8 percent slide on Thursday amid worries over slowing growth.
"Despite this dovish tone, we are sceptical", Schenker said in a note.
The U.S. central bank hiked interest rates four times last year, including in December when policy-makers' forecasts pointed to two more rises this year. Data released earlier on Friday showed United States employers added the most workers in 10 months as wage gains accelerated.
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The Dow Jones Industrial Average surged almost 750 points Friday, more than erasing its losses one day earlier, as a stock market hungry for good news received two morsels: a stronger-than-expected jobs report and comments from the Federal Reserve Chairman that signaled more flexibility in raising interest rates.
In December, Powell said that the Fed's balance sheet reduction was on "autopilot". "If we ever came to the conclusion that any aspect of our plans" was part of a problem, "we wouldn't hesitate to change it". "We don't believe our issuance is an important part of the story of the market turbulence that began in the fourth quarter previous year".
The stock rally advanced further after Fed Chairman Jerome Powell indicated at a conference in Atlanta that the Fed may pause from raising interest rates in the coming months.
When asked whether he would comply with a resignation request by Trump, Powell said, "No".
The president's attacks had become so intense that they had raised concerns that he might be considering firing Powell, a development which could send the market into a tailspin.
Friday's event offered a rare show of public unity by a sitting Fed chairman and his two immediate predecessors, who were asked about Trump's apparent disregard for the institution's independence. The remarks were received as more dovish than some of Powell's recent comments, which have drawn the ire of President Trump.
The central bank will convene its first policy meeting this year on January 29 and 30, followed by a second at the end of March. Only the headline has been changed.
This story has been published from a wire agency feed without modifications to the text.