Powell also discounted recent weakness in the economy, referencing the Institute of Supply Management's reading of manufacturing, which came in at its weakest level in about two years, sparking worries of a economic slowdown taking root in the U.S. Powell said that ISM report was already off a historically high level and remains strong.
Both of those messages cheered stock market investors who had been anxious about Trump's repeated attacks on his hand-picked choice to lead the nation's central bank and also the Fed's seemingly inexorable march to higher rates.
Not Worried Bernanke agreed, saying the evidence of big adverse effects from the balance sheet run-off was weak. Microsoft rose 3.1 per cent to $100.41 and Deere gained 3.4 per cent to $148.96. Do we need to move more, faster?
That robust figure, however, will not as of now change the Fed's plan to conduct two rate hikes this year, as the central bank awaits more economic indicators coming in the next few months.
The Labor Department's employment report showed the USA economy added 312,000 new jobs in December, far more than the 177,000 analysts expected.
"The market's been grappling with growth, the Fed and China", said Tony Roth, chief investment officer at Wilmington Trust in Wilmington, Delaware. Sellers were also driven by a dramatic shift in the tone of U.S. Federal Reserve Chairman Jerome Powell, who reversed his hawkish tone from December to dovish.
In response to criticism from President Donald Trump, Federal Reserve Chairman Jerome Powell said he would not resign if he were asked.
Pay raises frozen for Pence, Cabinet secretaries while the shutdown lasts
The memo notes the pay freeze would therefore end effectively on Saturday if no legislative action occurs. The government's Office of Personnel Management did not respond to a request for comment.
The head of the Fed, once confirmed by the Senate, can only be removed "for cause", not a policy disagreement.
Powell told the panel in Atlanta that he has not received any communications from the White House so far and has not scheduled a meeting with Trump.
A report Friday from JPMorgan Chase said trends in financial markets suggest investors have priced in around a 60 percent chance of a recession, while economists have put the odds of a recession within one year at around 40 percent. Wages and labour force participation both rose, signalling sustained economic strength.
USA and European stocks got a boost as the stronger-than-expected jobs report soothed some concerns of slowing economic growth.
Volume on US exchanges was 8.68 billion shares, compared to the 9.14 billion average over the last 20 trading days. -China trade talks would make some progress. A third Fed president, Thomas Barkin of Richmond, said he is hearing more concerns about economic risks and trade.
"Growth is likely to slow quite a bit next year, but still likely end up being above the growth rate of potential, which is consistent with a strong labor market and maybe even some further tightening", Yellen said. Powell said he did not think the latter was having much impact on markets, but that the strategy would be changed if it started interfering with the bank's broader goals of maintaining strong employment and stable inflation.