"We're going to continue to act as appropriate to sustain this expansion", Powell said in a remark that many interpreted as signaling that the Fed is likely to cut interest rates when it meets later this month.
Instead, he said the outlook of the United States economy continues to be a "favorable one", which he attributed to the Fed's decision earlier this year to cut rates for the first time in a decade. The Fed generally raises rates when the economy is good and lowers them when it weakens.
"There was nothing out of the ordinary that would sway the market one way or the other to think there was something different about how he has been talking about the markets since Jackson Hole", said Justin Lederer, Treasury analyst and trader at Cantor Fitzgerald. To guard against those risks and to boost below-target inflation, the Fed cut rates by a quarter point in July - a move Powell, at the time, called a "mid-cycle adjustment" and "not the beginning of a long series of rate cuts". "It did not put a 50 basis point cut in play".
The jobs report was below expectations. The only thing adding to "uncertainty" is the Fake News!'
The return of optimism still somewhat hinges on the outcome of trade talks with China, which resume at a senior level next month when Chinese Vice-Premier Liu He and his delegation are due to visit the US. The piece generated enormous controversy and criticism, including on Friday from presidential economic advisor Larry Kudlow.
Jerome Powell says consumer spending and support from monetary policy should help deliver economic growth between 2% and 2.5% this year. "But I don't want to predict". "The idea that we would deviate from that is just simply wrong". "And it may well be. that something positive comes out of that".
News that trade talks between the U.S. and China will resume in October also buoyed market sentiment.
Bullion has risen about 17.6 per cent so far this year.
But the ramifications have been global, with China-dependent supply chains disrupted. Coupled with a slowdown in Europe, this has raised fears of a global recession.
"The most likely outlook for our economy remains a favourable one with moderate growth, a strong labor market and inflation moving back up close to our 2% goal, " Powell said during a question and answer session.
Powell said the labor market was in quite a strong position and described the latest data as "consistent" with that picture.
Employment in the federal government rose, reflecting the hiring of temporary workers for the 2020 census.