At midday: S&P 500, Nasdaq hit record highs on Powell comments

Traders work on the floor of the New York Stock Exchange

Until Friday, most economist forecasts had suggested the Fed would raise rates so the top end of that range hits 3.25% around the end of 2019.

"My colleagues and I", the Fed chairman said in his speech, "are carefully monitoring incoming data, and we are setting policy to do what monetary policy can do to support continued growth, a strong labor market, and inflation near 2 percent".

"Congress understood this tension might exist between a central bank, which is responsible for the money supply, and those that have other angles in the economy", she said. "Inflation is near our two per cent objective and most people who want a job are finding one. If the strong growth in income and jobs continues, further gradual increases in the target range for the federal funds rate will likely be appropriate".

Both separately dismissed any notion that Trump's critical comments about the Fed's rate increases would factor into their policies.

"President Donald Trump's recent public criticism of Fed Chair Jerome Powell is a clever attempt to pre-emptively blame the Fed and its interest rate hikes for any future downturn in the U.S. economy".

Asian markets were mixed on Friday as China-US trade talks wrapped up with little progress being made, while the dollar held up ahead of a key speech by the head of the Federal Reserve.

The Dow slid 0.3 percent, the S&P 500 eased 0.2 percent and the tech-heavy Nasdaq Composite shed 0.1 percent.

Trump is "fueling the economy with fiscal stimulus and then asking that you don't tighten interest rates, but the Fed is normalizing monetary policy, not really tightening - it's accompanying the recovery and lifting rates up to the point where they are neutral", Laurence Boone, the chief economist of the OECD, said on the sidelines of the conference. "To return to the nautical metaphor, the FOMC has been navigating between the shoals of overheating and premature tightening with only a hazy view of what seem to be shifting navigational guides", Powell said.

West Ham's Wilshere out to prove a point at Arsenal
Arsenal manager, Unai Emery has wished West Ham United midfielder, Jack Wilshere the best ahead of his side's Premier League clash with the Hammers on Saturday.

- The soft price action around Fed Chair Powell's speech is another sign that the US Dollar is likely topping out in the short-term. Bank of Canada (BoC) Governor Stephen Poloz will speak on Saturday August 25 as part of the Jackson Hole Symposium.

Federal Reserve chair Jerome Powell sees plenty of reasons the US economy's strong run will continue.

The chairman said bringing interest rates back toward levels the the Fed sees as neutral is the safest approach to managing an economy that has raised questions about the central bank's diagnostic tools for shaping monetary policy. Officials previously indicated that three rate hikes would come this year.

Not all of the central bank's policymakers, however, are on board with Powell's plans.

Powell did not drop any bombshells nor did he mention Trump or provide much in the way of diverting from a path of gradual interest rate hikes.

The Federal Open Market Committee's job, as Powell defined it, is to be aware of how these estimates are changing and not take them as set in stone.

Policy Mistake Powell said the FOMC must balance the threat of moving too fast and shortening the expansion, or moving too slowly and allowing for overheating.

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