Steady rate hikes protect U.S. recovery: Fed chief

Fed chair Jerome Powell’s highly anticipated speech: what to expect

He further added the USA central bank should do more to help him to boost the economy.

The White House has announced tariffs on around $250 bn of China's exports to the US, while China has retaliated with its own levies on around $50 bn of US goods, which has prompted fears of an all out "trade war" and helped drive the US Dollar higher ever since April.

The Fed has been coming to Jackson Hole since 1981.

"I'm not thrilled with his raising of interest rates, no".

Without taking on the president's criticism directly, Powell stuck to his guns at the meeting of central bankers and academics from around the world, which is regarded as a key event for the world economy.

"Should inflation stay relatively grounded, the balance of risk approach that Powell talks about could lean towards a somewhat slower pace of tightening in 2019, as rates get closer to where the Fed might see the neutral rate lying", says Avery Shenfeld, chief economist at CIBC Capital Markets.

The Fed "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.

American presidents rarely criticise the Fed because its independence is viewed as important for USA economic stability. Traders of interest rate futures kept their bets on rate hikes in both September and December.

The president of the Fed inherited a well-defined and predictable strategy from his predecessor Janet Yellen to control the stimulus.

Powell noted that the economy remained strong and anyone who wanted a job could find one.

Inflation, meanwhile, is near the Fed's 2 percent target range.

". 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", he added.

Powell said he is well aware of the consequences of the Fed acting too aggressively. The Pound-to-Dollar rate was 0.38% higher at 1.2857 and the Euro-to-Dollar rate was 0.61% higher at 1.1611.

In recent months, some emerging market economies with high borrowing costs in dollars have suffered as a effect, including Turkey, where the lira has plunged in value, sparking an economic crisis.

"I am confident that the FOMC would resolutely "do whatever it takes" should inflation expectations drift materially up or down or should crisis again threaten", he said in prepared remarks.

"We have to take the signal seriously", he said in a CNBC interview Friday.

Despite putting United States consumers and companies on notice for higher borrowing costs, the Fed chairman said there was little sign of USA inflation rising above the 2% target. Trump has complained that the Fed's efforts are hampering his attempts to boost growth with his $1.5 trillion tax cut, deregulation and tougher enforcement of trade agreements.

The Kansas City Fed's annual conference here in Grand Teton National Park is among the central bank's higher profile annual events, drawing global media attention and an audience including representatives of other nations' central banks. A slower pace of rate increases would be meant to encourage continued borrowing and spending by companies and individuals to drive economic growth.

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