Focus now turns to the release this session of the October U.S PCE price index, the Fed's favoured inflation gauge, for more clues on the outlook for USA interest rates.
The broad-based S&P 500 climbed 61.61 points (2.30 per cent) to close at 2,743.78, while the tech-rich Nasdaq Composite Index surged 208.89 points (2.95 per cent) to 7,291.59.
During the Obama administration, the federal interest rate was dropped to zero for a long period of time, but Powell began to hike the rate back toward where it was in the early 2000s. That is not what he said.
He said interest rates are "just below" their so-called neutral range, the level at which they're neither speeding up nor slowing down the economy. This implies that after a probable December rate hike the Fed would be open to pausing hikes in 2019 to assess how much they do in fact need to rise. Powell said there is "no preset policy path" for future rate hikes, but that the Fed will have to rely on financial and economic data for clarity.
After keeping rates at a record low near zero for seven years, the Fed three years ago began gradually raising rates, including three hikes this year.
The Fed has raised interest rates steadily under Powell's leadership as the central bank has tried to balance promoting maximum employment with controlling inflation. "Our path of gradual increases has been created to balance these two risks, both of which we must take seriously".
Trump on Tuesday (Nov 27) again blasted his hand-picked chief of the USA central bank, saying the Fed was "way off base" and the rate hikes undermined the work he was doing to juice the United States economy. It is very unusual for a president to criticize the Fed, which is supposed to operate independent of politics.
"So far, I'm not even a little bit happy with my selection of [Jerome Powell]". I'm not going to say it's so much Trump ー that Trump has been sending mean tweets about Chairman Powell.
Besides flagging an escalation of trade tensions as a near-term risk, the Fed also listed as potential flash points the U.K.'s coming withdrawal from the European Union, Italy's budget dispute with the EU and high debt levels in some emerging-market economies. Minutes from the Fed's November meeting are also released later in the day.
And heightened trade tensions might lead to financial turbulence in China that could spill over into the US, the Fed said. George HW Bush said in 1998 that he blamed Alan Greenspan, the former Fed chairman, for his defeat in 1992 at the hands of Mr Clinton because he had not cut interest rates fast enough in 1990 and 1991. "That is a big shift in tone". But in this case, even Jay Powell must admit that any kind of dovish sentiment will be seen as a capitulation to the petulant adolescent sitting in the Oval Office whining to anyone who will listen that the guy running the Fed is a disloyal hawkish underminer. But many economists warn that the attacks actually could pressure the central bank to raise rates to demonstrate its independence from political influence. They clearly highlighted why policy makers go to such lengths to ensure their comments won't be misinterpreted, something that was evident in yesterday's remarks.