Last Updated Nov 28, 2018 4:22 PM EST
Federal Reserve chairman Jerome Powell praised the “strong” U.S. economy in a speech Wednesday, sending stock markets higher after seeming to forecast an eventual end to the central bank’s series of interest-rate hikes over the past three years.
“Interest rates are still low by historical standards, and they remain just below the broad range of estimates of the level that would be neutral for the economy ‑‑ that is, neither speeding up nor slowing down growth,” Powell said.
Stock markets immediately soared on the statement, which investors interpreted to mean the central bank would slow its pace of rate hikes over the next year or so. The Dow Jones industrial average gained 240 points shortly after the text of the speech was posted online at noon. The blue-chip stock index closed up by 617 points, or 2.5 percent, at 25,366. The S&P 500 rose 2.3 percent and the tech-heavy Nasdaq composite closed nearly 3 percent higher.
Powell also spoke reassuringly about stocks, which have tumbled from their record highs this summer, with big growth stocks like Apple and Amazon down 20 percent and more. “From the financial stability perspective… we do not see dangerous excesses in the stock market,” he said Wednesday.
The Fed cut its key interest rate to near zero starting in 2008 to boost economic growth in the wake of the worst economic slowdown since the Great Depression. It started to modestly raise rates in 2015 by a quarter of a percentage point and then in earnest since 2016.
The most recent hikes have drawn the ire of President Donald Trump, who has repeatedly slammed the man he named last year to chair the Fed for apparently undermining Mr. Trump’s economic policy.