Jerome Powell Takes Fed Helm as Inflation Pressures Rattle Global Markets

February 5, 2018

New York (Feb 5)  Jerome Powell starts his tenure as chairman of the U.S. Federal Reserve this week amid one of the biggest routs for domestic stocks in at least two years and increasing concern that he'll need to act more aggressively than his predecessor to tame inflation pressures in the world's biggest economy.

It's likely to be a raucous first week for Powell, a former Fed Governor and Wall Street veteran, as 10-year government bond yields rise to the highest level in four years, equity market volatility spikes to the highest since 2016 and investors look to the central bank for more clarity on its plans to raise interest rates amid an improving domestic and global economy.

Powell, who was confirmed by a vote of 84-13 in the Senate last month, never once deviated from the policy path set forward by his predecessor, Janet Yellen, during his six years as a Fed Governor and is widely seen as a "safe pair of hands" on the central bank's rate tiller as he prepares to be sworn-in for his four-year term later on Monday.

Fed policy makers who spoke last week, as well, appeared to remain committed to three rate hikes this year,  a view that is largely in-line with market expectations, even as growth and employment booms both at home and abroad and wages rise at the fastest pace in more than eight years.

Dallas Federal Reserve President Robert Kaplan told reporters in Austin, Texas Friday that he felt "more strongly" that the Fed's baseline should three rate hikes over 2018, noting that "you will see some inflation pressure this year.  "I believe that the Fed should be removing accommodation gradually but deliberately," he said.


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