REPEAT: MNI POLICY: Fed's Powell: Every Meeting Live for Hikes

Repeats Story Initially Transmitted at 00:27 GMT Nov 15/19:27 EST Nov 14

By Jean Yung

     WASHINGTON (MNI) - The Federal Reserve could raise interest rates at any of

its eight calendar-year meetings now that its leader plans to hold a press

conference after every meeting, Chair Jay Powell said Wednesday, adding he

expects markets to gradually adjust their expectations accordingly. 

     "Certainly, all meetings are live now, there's no question about it now,"

he told a forum in Dallas. "The market has got in the habit of us moving at

press conference meetings" in March, June, September and December, but that will

change starting next year. And "over time markets are going to have to get used

to that." 

     Powell also stressed that the Fed will be guided by incoming data in

determining the timing and pace of the next rate hikes. Officials expect to

raise rates another 125 basis points over the next few years. 

     "We have to be thinking about how much further to raise rates and the pace

at which we will raise rates. The way we will approaching that is to be looking

really carefully at how the markets and the economy and business contacts are

reacting to our policy," Powell said. 

     For now, he's "very happy" about the state of the economy and believes

inflation is "right on target, and there's pretty good reason to think we'll

continue in that vein." 

     --BALANCE SHEET

     Powell said the Fed's ongoing normalization of its balance sheet is "going

very well," but gave no indication that policymakers have reached a consensus

over the ultimate size of the "new normal" balance sheet.  

     "I think we don't actually know what the equilibrium state of the balance

sheet will be," he said. "In the longer run the balance sheet will depend on

public demand for our liabilities, that is to say currency and reserves." 

     The demand for bank reserves is much higher now, he added. 

     "We are in the process of returning to a small balance sheet and I'd say

we're on track to do that." 

     --HEADWINDS AHEAD

     Slowing growth abroad as well as the waning of the fiscal stimulus out of

the Trump administration pose headwinds for the economy, Powell said. 

     While business contacts report trade tensions as a rising cause of concern,

"we don't see much in near term effects," Powell said. "It hasn't shown up yet

in the data," in the form of either slower growth or higher inflation. 

     Also, Powell signaled that the recent volatility in global markets,

especially in equities, were not a high concern, noting market volatility is

only one of many factors the Fed watches in monitoring financial conditions. 

--MNI Washington Bureau; +1 202-371-2121; email: jean.yung@marketnews.com