Federal Reserve Board Chair Jerome H. Powell on Wednesday suggested that the central bank could slow the pace of its interest rate increases, a statement welcomed by investors worried about the strength of the global economy and swooning markets.
His comments appeared to mark a change from his position last month, when he said that the Fed still had a “long way” to go before it reached what economists consider an appropriate level.
Powell’s description of the central bank’s approach sent the stock market soaring, with investors eager for any sign that the Fed might be preparing to pause its slow but steady effort to raise interest rates. The Dow Jones industrial average pushed up 618 points, to 25,366, an increase of 2.5 percent, in a surge that erased its November losses and put it back in positive territory for 2018. The Standard & Poor’s 500-stock index climbed 2.3 percent, and the tech-heavy Nasdaq composite index rose 3 percent.
Powell’s scheduled remarks at the Economic Club of New York came a day after President Trump pilloried Powell — whom he appointed last year — for his stewardship of the central bank. Trump said in an interview with The Washington Post that the Fed is a “much bigger problem than China,” complaining it is taking steps to withdraw stimulus from the economy — the latest in a wave of strong criticism that Trump has leveled at the Fed chair.
Fed officials say they operate independently of politics, and there is no evidence that Powell made his comments in response to Trump’s attacks. But the remarks nevertheless could ease concerns among Fed critics, such as Trump, who have accused the central bank of moving too aggressively to slow the economy’s expansion.
The Fed had lowered rates to zero after the 2008 financial