Powell sees potential threats from global slowdown

Fed's Powell says press conference at every meeting means all sessions are'live'More

"With labor market conditions close to maximum employment and inflation near our 2 percent objective, now is a good time to take stock of how we formulate, conduct, and communicate monetary policy", Fed Chairman Jerome Powell said in a statement.

Powell also dismissed Pres. Trump's criticism of his conduct of monetary policy, saying the Fed is "doing fine" and its independence has not been affected by the stream of attacks directed at it - "We don't try to control things we don't control, we try to control the controllable".

The Fed's goals of both maximum sustainable employment and stable inflation are set by Congress and not to be part of the review.

While generally upbeat about the U.S. economic outlook, Mr Powell listed potential challenges including slowing growth overseas, fading fiscal stimulus and the lagged effect on the economy of the Fed's eight rate increases since late 2015. "We know that when we're making policy and we think about those, and (we) kind of have a sense of what they might be", he said.

Now that the economy is growing well above potential and unemployment is down to 3.7 percent, with inflation roughly at the 2-percent target, the Fed has settled into a roughly quarterly rate-hike cycle. "We have the tools to do it and we have the protections to do it", Powell said. "He opted to try to calm the markets, at least from the Fed's side". Ten-year yields were at 3.12 percent as of 6:15 a.m.in London.

Powell said the Fed is raising rates slowly in an attempt to avoid the mistake of hiking them either so quickly that it pushes the economy into a recession, or moving too slowly and allowing inflation to get out of control.

US central bankers are pursuing a policy of gradualism, yet the higher rates have attracted the ire of President Donald Trump.

The Fed has the tools and the protections it needs to serve the public in a "non-partisan, professional way", Powell said.

Meanwhile, market players would also be monitoring the announcement of Malaysia's gross domestic product performance for the third quarter of 2018, to be released later today.

He played down recent stock market turbulence, which saw U.S. equity prices suffer their steepest loss last month since 2011, noting that equity price moves were only one of the many factors that the Fed takes into account. Trump nominated Powell as chair last November, but has become increasingly critical of the Fed, calling it "crazy" and describing it as the "biggest threat" to his presidency.

"The markets definitely got in the habit of having us only move on press conference meetings", Mr Powell said. "Over time the market's going to have to get used to that".

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