Federal Reserve rate hikes have been controversial this year. Trump and many investors have felt that rate hikes in 2018 have been counterproductive. While the Fed does have a difficult task of balancing the benchmark rates in relation to all economic signals, it could be argued that their approach this year has been overly aggressive.

That could be about to change, as some economists believe that the Fed is preparing to become more restrained with their rate revisions in December and throughout 2019.

Stock Markets Jump After Powell Makes Public Comments

Federal Reserve Chairman, Jerome Powell, spoke at the Economic Club of New York this week. He told attendees during a speech that current interest rates are “still low by historical standards, and they remain just below the broad range of estimates of the level that would be neutral for the economy, that is, neither speeding up nor slowing down growth.”

Powell’s comments indicate that he is aware of the sentiment of both President Trump and investors around the United States. There has been uncertainty and a fear that higher interest rates would put the benchmark above what the economy needs today. By indicating that current interest rates are essentially on point and serving their purpose, some analysts believe that the Fed could hold the current rate throughout the rest of this quarter.

The Dow Jones Industrial Average rallied after Powell’s comments were published, closing with gains of 2.5% on Wednesday. The S&P 500 and NASDAQ Composite also closed in the green at the end of the day, with 2.3% and 3% gains respectively.

The speech from Powell can be taken positively in the context of his previous comments. At the beginning of this quarter, he said that “we may go past neutral, but we’re a long way from neutral at this point, probably.”

The change in tone is a strong sign that the Fed could end its aggressive hikes.

December Will Reveal the Federal Reserve True Position

The Federal Open Market Committee will meet on December 19 to decide on a final rate hike for 2018. If Powell’s recent words are anything to go by, then markets could get a significant boost going into 2019 with a stable interest rate or at least a smaller hike when compared to previous quarters.