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9/26/2018, 9:28 PM (Source: TeleTrader)
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Neutral rate unknown but stimulus remains – Powell

Speaking at a press conference on Wednesday, Federal Reserve head Jerome Powell warned there could be another systemic risk down the road, like the implosion of Lehman Brothers, but one that's not a bank. Such event would be "very threatening" and the central bank shouldn't be stripped of any more of its powers, he stressed. Asked about rate-setters' stance after benchmark borrowing costs were lifted, the Fed chairman acknowledged there is no "precise understanding" about where the neutral level would be.

The policy remained "accommodative" even though the Federal Open Market Committee dropped the reference from its statement today after many years and raised rates, according to Powell. He claimed the stimulus is still there, citing the projections of the panel's members, but asserted that the phrase in question "has run its useful life."

Even though interest rates are "going up across a broad range of consumer borrowing," they are "still quite low by historical levels" and housing is "still more affordable" than before the financial crisis, the top policymaker added.

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