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How Far to Fed Neutral?
Jerome Powell’s comments may have been less dovish than they first sounded
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Federal Reserve Chairman Jerome Powell fueled bets on risk assets after saying the central bank is “just below the broad range of estimates” for a neutral level of interest rates. But he didn’t say where policy makers should halt their rate-hike campaign, and it’s worth noting that the top of the range of Fed projections, at 3.5 percent, is still more than a percentage point away. The bottom line for analysts including Michael Every at Rabobank Groep is that Powell presented “less of a dovish shift than one would perceive at first sight” compared with his Oct. 3 remark that the Fed was a “long way from neutral.”