Fed officials express caution about pace of future hikes

Fed chair Jerome Powell softens line on interest rate rises after Trump attack

Aussie dollar lifts above 73 US cents, Wall St rebounds on slower rate hike hopes

The minutes reinforce comments by Chairman Jerome Powell on Wednesday that suggested central bankers are getting close to an estimated range of interest rates that neither speed up nor slow down growth and are now adopting a flexible approach to their policy path.

Gold jumped on Wednesday after Powell said the central bank's policy rate is "just below" estimates of a level that neither brakes nor boosts a healthy USA economy.

In recent weeks, President Donald Trump has repeatedly attacked the Fed - and Powell personally - for their rate increases, which the president has blamed for any economic weaknesses or stock market turmoil.

Wall Street embraced the news with a rally for Treasuries and surge of more than 2 per cent for major USA stock indexes.

At the September meeting, the Fed signalled that it would likely raise rates one more time this year, and it projected three more rate hikes in 2019.

Despite the yellow metal climbing over 1 percent following the intel into the 2019 hikes, gold's gains were limited as investors recognized that Powell's statement had a dovish tone, which helped revive risk appetite.

On Wednesday, Mr Powell also emphasised these uncertainties.

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The current system relies on the Fed paying interest on some reserves to set the federal funds rate.

U.S. stock markets moved sharply higher on the news.

The S&P 500 index rose 61 points, or 2.3 per cent, to 2,743. "This was again on display today", RBC Capital Markets chief USA economist Tom Porcelli wrote in a note. Salesforce.com surged 10.3 per cent.

Just on Tuesday, Fed Vice Chair Richard Clarida, in a speech to numerous same economists and investors in NY, used precisely the same language to describe the policy rate as "just below" the range for neutral.

With last year's deep tax cuts and fiscal stimulus from Congress, the world's largest economy continues to hum: producing steady job growth and driving the unemployment rate to its lowest level since 1969 even as inflation remains right at the Fed's two percent target. But after that, officials said further hikes would not be on a preset course. Rather, he said, the Fed will assess the most recent economic and financial data in deciding whether or how fast to keep raising rates.

The Fed takes equally seriously the risks of hiking too quickly and shortening the economic expansion, and on the other hand of hiking too slowly and prompting higher inflation or financial instability, Powell said.

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