The Dow Jones Industrial Average surged almost 750 points Friday, more than erasing its losses one day earlier, as a stock market hungry for good news received two morsels: a stronger-than-expected jobs report and comments from the Federal Reserve Chairman that signaled more flexibility in raising interest rates.
Stocks were already trading higher after the release of December labor data that showed job and wage growth were still solid despite the market's effort to convince investors otherwise. "Can we wait?" Mester said.
Taken together, Mester said, those are the sorts of developments one would expect in an economy where interest rates were near a neutral level that was neither encouraging nor holding back economic activity.
Powell denied the criticism that the Fed's gradual reduction of its holdings of Treasuries, mortgage bonds and other assets - amounting to 4.5 trillion dollars when the Fed began its balance sheet normalization program in October 2017 - had exacerbated the stock market turbulence in the fourth quarter of 2018.
He has blamed the Fed for stock market declines and said he is "not even a little bit happy" with Mr Powell, whom he named to lead the Fed in 2017.
Stocks surged on Friday after the Labor Department reported USA firms created 312,000 jobs in December, and Powell said the Fed would be flexible in deciding on any further rate increases. The Fed said in December it anticipated raising rates twice in 2019.
Since mid-December, investors have been expressing disagreement with Powell's assessment of the economy, saying the Fed had it all wrong and that the economy was weakening.
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At the conference on Friday, Mr Powell said he has not spoken directly to Mr Trump and would not resign if asked.
Traders said Powell's comments were perceived as dovish because he said the Fed had no preset path for policy and could be patient when it comes to future interest rate hikes. Under the law that governs the Federal Reserve, a president can only remove a Fed chairman for cause.
A third Fed president, Thomas Barkin of Richmond, said he is hearing more concerns about economic risks and trade.
The recent market turbulence has posed a dilemma for the Fed, as a seeming loss of confidence in financial markets about the US economy's prospects was offset by upbeat data from the real economy, including a strong December jobs report.
Asked if he would resign if Trump asked him to do so, Powell responded with a short "no". He also said that the central bank would be willing to "adjust" policy if it disrupted the market or created adverse financial conditions, running against the central bank's statutory goals.
The Fed's tightening cycle includes both rate hikes and the gradual shedding of its more than $4 trillion in assets. No face-to-face meetings have been scheduled, he added.