NEW YORK, Nov 30 (Reuters) - The Federal Reserve could scale back the pace of its interest rate hikes as soon as December, Fed Chair Jerome Powell said on Wednesday, while cautioning the fight against inflation was far from over and that key questions remain unanswered, including how high rates will ultimately need to rise and for how long.
Powell, in remarks prepared for delivery at the Brookings Institution think tank in Washington, did not indicate his estimated "terminal rate," but said it is likely to be "somewhat higher" than the 4.6% indicated by policymakers in their September projections.
Curing inflation "will require holding policy at a restrictive level for some time," he said. read more
US stocks turned sharply higher on his comments, while Treasury yields fell back and the dollar turned lower.
STOCKS: S&P 500 (.SPX) gained 74.12 points, or 1.87%, to 4,031.75BONDS: U.S. Treasury 10-year note rose 13/32 to yield 3.6995%, down from 3.748% late on Tuesday.FOREX: The euro turned 0.61% higher and the dollar index (.DXY) fell
CHUCK CARLSON, CHIEF EXECUTIVE OFFICER, HORIZON INVESTMENT SERVICES, HAMMOND, INDIANA
“(The market) has waited with bated breath, looking for that clarification in terms of duration and extent of Fed tightening. And anything that gives hope to the idea the Fed is becoming less hawkish is viewed as a positive for stocks, at least on a short-term basis.”
“The big take-away is (Fed Chair Powell) signaling (the next interest rate hike) is going to be 50 basis points."
“They’re willing to slow things down a bit. They are trying to calibrate things like everyone else is. This isn’t the end. They’re going to be data dependent and see where the data leads.”
RICK MECKLER, PARTNER, CHERRY LANE INVESTMENTS, NEW VERNON, NEW JERSEY
"You can't keep raising rates as quickly as they were doing it. That said, investors always like the comfort of hearing it directly from the chair. More than that, I think (investors) are starting to get a little more comfortable with investing at rates at this level... Investors have gotten to the point now where they are looking to come back into the market. So I think that's why you're seeing the initial reaction is positive. The thing you always have to remember with the Fed is that it's a dynamic situation, and they respond as events occur."
SAMEER SAMANA, SENIOR GLOBAL MARKET STRATEGIST, WELLS FARGO INVESTMENT INSTITUTE, CHARLOTTE, NC
"The market is taking this glass-half-full, it could've been worse approach. Powell didn't really say anything that new."
"The path of least resistance since the last inflation number has been higher. There's momentum to the upside in place until something outright stops it."
"Policy continues to tighten. People are just not appreciating it because even if the Fed were to pause when they get to 5% you still have a balance sheet that continues to shrink. The balance sheet is almost as important if not more important than the level of rates."
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