Economists and investors have been scratching their heads this week over signals from the Federal Reserve, which left the future of U.S. monetary policy open to broadly divergent interpretations.
Analysts at Westpac explain that the United States equity markets like the fact that the Fed Chairman Powell appears open to a slower pace of monetary tightening.
Factually, Powell's remarks on Wednesday and in October are both true.
On Thursday, the Fed's Open Market Committee published the minutes of a meeting in early November.
Analysts read that as a suggestion that Powell intends to be more cautious about hikes in rates.
Traders work on the floor of the New York Stock Exchange in New York on November 28, 2018.
USA crude oil futures settled at $51.45 per barrel, up $1.16 or 2.31 percent.
Stock markets began a broad descent toward a correction - a decline from the most recent peak of at least 10 percent - in early October, just after Powell had sounded a quite confident tone on the economy.
Powell's dovish comments mean the probability of accelerated pace of rate increases in the USA is rather low, and that should burnish the appeal of all emerging market assets.
"His description highlights the significant uncertainty around estimates of neutral, a theme he mentioned at his speech at Jackson Hole in August", Jan Hatzius, chief U.S. economist for Goldman Sachs, wrote in a note to clients Wednesday.
Powell also revealed the economic growth coincides with inflation, and the Fed's annual goal of 2 percent interest rate increases. But that doesn't mean rates won't rise further, as most officials said another rate increase was likely, perhaps as soon as next month.
Mr. Powell repeated a relatively upbeat view of the economic outlook, including low unemployment and stable inflation.
"We know that things often turn out to be quite different from even the most careful forecasts", Powell said at an Economic Club of NY luncheon on Wednesday.
"Many baby boomers like me are, however, reaching an age where a good report is, 'Well, there are a number of things we should keep an eye on, but, all things considered, you are in good health, '" he said. "Our gradual pace of raising interest rates has been an exercise in balancing risks".
"What do you do?" said Powell in NY.
The speech was "a reassuring message from a market perspective because it removes concerns of a Fed dead set on tightening up to a point where rates would intentionally slow down the economy", he added.
Mr. Powell flagged rising indebtedness and deteriorating loan quality among some US businesses as top vulnerabilities within the USA financial system, but otherwise described such risks as moderate.
Policy makers provisionally penciled in three quarter-percentage-point rate increases for next year, according to the median of forecasts released in September's so-called dot plot.
It isn't clear that these conditions could trigger a recession on their own, he said, noting that the ratio of corporate debt to economic output didn't seem unusual. The buildup of corporate debt amid weakening lending standards caught the attention of the committee.
Compared with his recent predecessors, Mr. Powell, who became Fed chairman in February, has more regularly noted that the past few expansions ended with bursting financial bubbles rather than surging inflation.