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Capital Calls: Powell’s troublesome poker face

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Federal Reserve Chairman Jerome Powell testifies before the Senate Banking Committee hearing on Capitol Hill in Washington, December 1, 2020. Susan Walsh/Pool via REUTERS

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WASHINGTON, April 28 (Reuters Breakingviews) - Concise insights on global finance.

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POKER FACE. U.S. Federal Reserve boss Jerome Powell is keeping his cards close. The central bank on Wednesday maintained the status quo on interest rates and $120 billion in monthly asset purchases, as expected. He was more optimistic about the economic outlook, but Powell refused to hint at his tapering timeline. He needs to stop playing poker.

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Americans are feeling good about the economy again. The Conference Board's consumer confidence index in April was at its highest level since February 2020. Meanwhile, the S&P CoreLogic Case-Shiller house price index jump 12% in February, the fastest pace since February 2006.

Still, Powell said on Wednesday that it’s not time to talk about tapering bond purchases. That’s meant to happen when the Fed reaches its twin goals of long-run 2% inflation and so-called full employment, the latter being a somewhat nebulous goal read more .

If the economy continues to improve, the Fed may quickly start to look overly accommodating . If he gives the market time to prepare, the transition to tapering could potentially be done without the market blindly going all-in. (By Gina Chon)

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Earlier in Capital Calls:

Shopify accelerates to slowdown read more

Mishcon de Reya IPO needs polished investor brief read more

Boeing’s long haul read more

Santander’s Brazil gloom looks overdone read more

Sony caution jars with market mood read more

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