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Powell sees bright moment for economy with more hikes ahead

Ten years after the peak of the financial crisis, Jerome Powell’s Federal Reserve sees a U.S. economy capable of humming along without support from monetary policy.

Unemployment is low. Inflation is stable and anchored. Financial conditions merit watching, but don’t look overly worrisome. And against that backdrop, policy makers are raising interest rates gradually despite renewed criticism from President Donald Trump.

They made an expected rate increase on Wednesday, their third in 2018, while telegraphing another before year-end. In an optimistic press conference, the chairman also indicated that the path is clear for future hiking well into 2019.

“It’s a particularly bright moment,” Powell said of the economy. He praised the value of gradual rate increases, which have allowed the Fed to watch their policy moves play out.

“What we’re going to be doing, as we go through time, is asking at every meeting whether monetary policy is set to achieve our goals,” Powell said.

 

 

Read more on Bloomberg

 

 

Markets may be signaling rising recession risk: Fed study

A narrowing gap between short-term and long-term borrowing costs could be signaling heightened risk of a U.S. recession, researchers at the San Francisco Federal Reserve Bank said in a study published on Monday.

The research relies on an in-depth analysis of the gap between the yield on three-month and 10-year U.S. Treasury securities, a gap that like other measures of short-to-long-term rates has narrowed in recent months.

Several Fed officials have cited this flattening yield curve as a reason to stop raising interest rates, since historically each time it inverts, with short-term rates rising above long-term rates, a recession follows.

The study, published in the San Francisco Fed’s latest Economic Letter, bolsters that view.

“In light of the evidence on its predictive power for recessions, the recent evolution of the yield curve suggests that recession risk might be rising,” wrote San Francisco Fed research advisers Michael Bauer and Thomas Mertens.

Still, they noted, “the flattening yield curve provides no sign of an impending recession” because long-term rates, though falling relative to short-term rates, remain above them.

 

 

Read more on Business Insider

 

 

 

Powell as Fed Chief—A Win for CRE Investors and Lenders?

As 2017 comes to a close, commercial real estate total transaction volume is over $500 billion according to CoStar. Although, that equates to a 14 percent year over year decline, many forget that those levels are still higher than 2006—a banner year. Regardless, numerous industry observers are holding their collective breath. In fact, Janet Yellen began 2017 indicating a potential bubble in commercial real estate driven in part by today’s extended low interest rate environment.

In response, lenders, investors and regulators remain anxious with the possibilities of cap rates blowing out in the face of rising interest rates. But are these concerns warranted and will the nomination of Jay Powell actually lead to strong levels of commercial real estate price growth?

Read more from National Real Estate Investor

Trump picks Jerome Powell to succeed Yellen as Fed chair

President Donald Trump nominated Jerome Powell to run the Federal Reserve once current Chair Janet Yellen’s term expires, in a move widely expected and one unlikely to disturb the roaring stock market.

Trump made the announcement during a Thursday afternoon ceremony in the Rose Garden.

The move follows an extended period of speculation over who would be named to head the central bank, whose aggressive policies have been considered crucial to a climate of low-interest rates, surging job creation, and booming asset prices.

Read more from CNBC

Trump Is Turning the Fed Pick Into a Reality Show

Before Trump was president, he was doling out brash criticisms and weekly drama on his reality television show, The Apprentice. Thus far, he seems pretty keen on bringing a similar flair, suspense, and tension to his presidency. Take, for example, his approach to appointing a new Federal Reserve chair—a choice that he’s been teasing the American public with for months.

Read more from The Atlantic