The Federal Reserve chairman announced that US interest rates are being closed at a "neutral" level, resulting in stock market marketing, as investors have interpreted comments as a signal that the central bank is about to slow down the fast-growing program.
While he defended the Fed's recent steep rise in prices, Jay Powell said the central bank would be very careful about new economic data, as monetary policy makers decide what to do next.
Prices range from slightly below neutral estimates – levels that do not generate growth to accelerate or slow down – the Fed's chairman said a possible sign that policy makers can decide they do not need much more to be eliminated.
"There is no pre-defined policy direction," said Mr Powell. "We will pay a great deal of attention to what our incoming economic and financial data shows."
Commenting on the New York Economic Club's blog Wednesday, he was faced with pressure from the White House to keep up the pace. This week, President Donald Trump told The Washington Post that for the fourth time this month the tariffs will be raised next month, "there is a small base on what they are doing."
Mr Trump added: "To date, I'm not even a bit happy with my choice of Jay."
Markets reacted sharply to comments by Mr Powell, which, unlike the assessment that he delivered last month. At the beginning of October, he said rates were "a long way" from a neutral level, triggering sales, as investors feared that the Fed was about to raise long-term interest rates.
On the afternoon market, S & P 500 rose by 1.6 percent, following the words of Mr Powell's jump in percentages. Dow Jones Industrial Average extended its profits to sell 1.9 percent higher, and Nasdaq Composite grew by 1.9 percent.
Government bonds collapsed as profits declined. The US government's rate for the 10-year period fell by 0.7 basis points (3.0498 percent) and before Powell spoke 1.1 bits. The politically sensitive two-year bond yields dropped by 2.4 basis points (2.8066 percent).
In his speech, Mr Powell did not directly refer to Mr Claus's criticism of Mr Trump. However, he insisted that the Fed was right to launch a gradual increase in rates, after having decided that the economy was no longer good, thanks to the extremely low level that was observed after the 2008 financial crisis.
"Interest rates are still low by historical standards and remain slightly lower than broad estimates of a level that is neutral to the economy, that is, not faster, nor slowing growth," said Mr Powell. "My FOMC colleagues and I, as well as many private sector economists, predict steady growth, low unemployment and inflation by almost 2 percent."
FED's gradual rate growth was a two-way risk-mitigation process, "said Mr Powell.
"Too fast movements could risk shortening the expansion," he said. "We also know that too slow progress – keeping too long a low interest rate – could lead to other distortions in terms of higher inflation or destabilizing financial imbalances."
Speaking after the Fed issued a new Financial Stability Report. He said that overall debt in the financial system was not "unusual or excessive". Although some asset ratings were high, the Fed did not see any "dangerous excess" in the stock market.
The Fed also offered a good idea of the financial market risks, saying that while the policy makers paid attention to places, including corporate debt, the overall system was flexible. The Fed's latest financial health check has shown that "all the things you think you are in good health," said Powell.
The main worrying issue was corporate lending, where high debt and interest burden increased the volume of borrowing, and loan quality signatures deteriorated.