Wednesday was a good day on Wall Street.
NEW YORK (CBSMiami/CNN) – It was a good day on Wall Street.
Federal Reserve chairman Jerome Powell gave investors reason to cheer on Wednesday when he suggested that the Fed may slow down its interest rate hikes.
The Dow surged on the news and was up nearly 540 points, or more than 2%, in midday trading. The S&P 500 and Nasdaq each rose about 2% as well.
Powell reassured investors that the Fed wouldn’t risk killing off economic growth by continuing to aggressively raise rates next year.
“Our gradual pace of raising interest rates has been an exercise in balancing risks,” Powell said during a speech at the Economic Club of New York. “We know that moving too fast would risk shortening the expansion. We also know that moving too slowly — keeping interest rates too low for too long — could risk other distortions in the form of higher inflation.”
Powell noted that rates remain relatively low and that they are just below what many economists consider “neutral for the economy — that is, neither speeding up nor slowing down growth.”
Investors seemed to interpret Powell’s comments as a sign that the Fed, which is widely expected to raise rates again at a meeting next month, may now only hike rates once or maybe twice at most in 2019 as opposed to earlier forecasts of three or four hikes.
