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In the Washington Post, Powell said: "With the muted inflation readings that we've seen coming in, we will be patient as we watch to see how the economy evolves".

USA stocks rose higher on Wednesday after Federal Reserve Chairman Jerome Powell said that the gradual interest-rate hikes are meant to balance risks as it tries to keep the economy on track.

The S&P closed up 3.4 percent.

Powell also addressed the issue that the central bank was overusing interest rate policy in an effort to prevent the economy from overheating. Under the law that governs the Federal Reserve, a president can only remove a Fed chairman for cause.

Fed Unity That view was bolstered by the release just hours before of a blockbuster jobs report for December, and was backed by Powell's two predecessors - Janet Yellen and Ben Bernanke - who appeared together with him in Atlanta in a rare show of public unity. That could lead to renewed turbulence as the Fed and other central banks seek to normalise monetary policy at a time of cross currents in the global economy.

Powell denied the criticism that the Fed's gradual reduction of its holdings of Treasuries, mortgage bonds and other assets - amounting to 4.5 trillion dollars when the Fed began its balance sheet normalization program in October 2017 - had exacerbated the stock market turbulence in the fourth quarter of 2018.

The two former central bank chairs also threw their support behind Powell and Fed independence following months of escalating criticism from Donald Trump.

Her comments, from a sometimes hawkish Fed official, highlighted the change in tone at a central bank that, after two years of roughly quarterly rate increases, was now assessing the risks of going too far.

The increase of 312,000 jobs to the economy last month exceeded economists' expectations of 177,000, according to Reuters.

U.S. Treasury yields jumped on Friday, triggering a massive break in the Treasury notes and Treasury bonds futures markets.

Analysts predicted that job reports for January and February will be more of a policy reference for the Fed than the December report as they would provide a clearer picture of how tightened financial conditions affect the USA economy.

The world's biggest economy expanded well above potential last year and, along with US consumers, is expected to remain strong through this year.

"The markets are feeling better that the Fed is not strangling the overall economy and perhaps forcing it into a recession, and that removes a monetary policy concern that has been hanging over the market for the past few months", said Robert Pavlik, chief investment strategist and senior portfolio manager at SlateStone Wealth LLC. "Powell is definitely trying to calm the markets".

The Fed's tightening cycle includes both rate hikes and the gradual shedding of its more than $4 trillion in assets. "I have no news for you on that".

Federal Reserve Chairman said the central bank can be patient as it assesses risks to a US economy with good momentum and will adjust policy quickly if needed.