Investors interpreted comments by Mr. Powell, the Federal Reserve chairman, as an indication that the central bank may be less inclined to continue raising interest rates.<\/b>
\nStocks rose Wednesday afternoon after investors took comments by the Federal Reserve chairman to mean that the central bank could be closer than expected to ending its current push to lift interest rates.
But investors, who have worried that rising interest rates could dampen economic growth, may be reading too much into the comments by Jerome H. Powell, the Fed chairman. Although policymakers are indeed near the end of the rate-increase cycle, the focus is on how quickly the end will come.
Mr. Powell said on Wednesday that the Fed\u2019s benchmark interest rate was approaching an important threshold: the \u201cneutral\u201d level at which it would no longer provide a stimulus to the economy.
Mr. Powell said the rate, which is currently in a range from 2 percent to 2.25 percent, is \u201cjust below\u201d most estimates of the neutral level. The description contrasted with his statement in October, after the last change in the benchmark rate, that the rate was still \u201ca long way\u201d from neutral.
The S&P 500 rose sharply after the publication of Mr. Powell\u2019s remarks at noon. Investors appeared to interpret the comments as a sign that the Fed may be reconsidering how far and how fast to raise interest rates.
But Ian Shepherdson, chief economist at Pantheon Macroeconomics, said the remarks were \u201cnot as dovish as markets think.\u201d He said Mr. Powell appeared to be offering a more carefully phrased version of the Fed\u2019s view that the benchmark rate remains below the neutral rate.
\u201cMr. Powell\u2019s own views might well be leaning to the dovish side, but he was not, in our view, signaling any impending change\u201d in plans, Mr. Shepherdson said.<\/p>\n