Powell's speech at the annual symposium of central bankers in Jackson Hole was always slated as a likely pivotal moment for the Dollar, largely due to a more temperate outlook for the United States and global economies, risks stemming from the so-called "trade war" with China and a recent rout in emerging markets.
"The economy is strong", he said.
Powell's speech discussed at length the challenges of monetary policy at a time when economic benchmarks - such as estimates of full employment or the neutral policy rate - are uncertain.
He said the Fed's current strategy of steady rises balanced the risks between moving too quickly, which could limit economic expansion, and raising rates too slowly, which could lead to overheating.
Looking ahead, market participants will closely follow the speech by Fed's J.Powell, particularly after recent comments by President Trump regarding the Fed's policy of raising rates. Most market participants had expected the central bank to raise rates again in September and December.
U.S. President Donald Trump reiterated his displeasure with the Fed's rate hikes earlier this week and investors waited to see whether Powell would respond to such criticism.
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"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. "Inflation is near our 2 percent objective, and most people who want a job are finding one". The economy is strong and the Fed must walk a tight line between not snuffing out growth and not allowing an overheated economy to produce runaway inflation.
Market sentiment moved in a positive direction on the optimistic economic news that weekly jobless claims fell to 210,000 in July and approached a low not seen in forty-nine years.
He said prices were rising at about the Fed's target pace of two percent, signaling the U.S. central bank does not expect to accelerate interest rate increases as some investors have feared.
The 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.
Some analysts have expressed concerns that if Fed policy drives the Dollar much higher, it could endanger financial stability in the emerging world in a manner that might eventually backfire on the US. While the trade conflict between Washington and Beijing darkens the economic outlook, the supply versus demand position in oil markets remains relatively tight -especially because of the looming USA sanctions against Iran.
White House audio recordings show that President Richard Nixon pressured then-Fed Chairman Arthur Burns to keep interest rates low to boost Nixon's re-election chances in 1972.
"Over the course of a long recovery, the USA economy has strengthened substantially", Powell said. It marked the second time this summer that Trump had publicly criticized the policymaking of the Fed.