All eyes on Jackson Hole with the Fed’s Economic Policy Symposium

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NAFTA negotiations seem to be finally getting traction, but the choice of the U.S. to deal with Mexico first still leaves a lot of question marks regarding how it will affect the Canadian economy.

The Federal Reserve's steady interest rate hikes are the best way to protect the USA economic recovery and keep job growth as strong as possible and inflation under control, Fed Chair Jerome Powell said on Friday in a high-profile endorsement of the central bank's current approach to policy.

The remarks from Kaplan and George came as central bankers gathered for their annual summer conference in Jackson Hole, Wyoming, sponsored by the Kansas City Fed.

The Canadian dollar traded higher at 76.71 cents United States compared with an average of 76.55 cents USA on Thursday. It has also notched up braod gains over the Russian Rouble and Brazilian Real as well as a host of Asian currencies.

Powell added that while annual inflation has risen to near the Fed's 2 percent target rate, it doesn't seem likely to accelerate above that point.

Powell noted that the economy remained strong and anyone who wanted a job could find one.

However, he noted the U.S. economy remained strong and anyone who wanted a job could find one, while prices were rising at about the Fed's target pace of 2%.

The Fed in June increased interest rates for the second time this year, and penciled in two more rate hikes for the year.

However, the Kansas City Fed's annual conference is among the central bank's higher-profile annual events, drawing worldwide media attention and an audience including representatives of other nations' central banks.

U.S. rates aren't going to go up forever, and neither is the U.S. Dollar.

It was not the first time he had struck out at Fed policy for not supporting faster economic growth but he went even further when he also declined to confirm his support for the central bank's independence, something that has the potential to worry financial markets. Five of those rate hikes, including two this year, have occurred with Trump in the White House. "This is good news, and we believe that this good news results in part from the ongoing normalization process, which has moved the stance of policy".

Powell made no mention of the recent public criticism from President Donald Trump, who has said he is unhappy with the Fed's rate hikes. The particular danger for him is that weakness could coincide with the 2020 election campaign, when he would be most vulnerable.

Almost 8 out of 10 business economists at major corporations said the Fed's current actions are "about right", according to a survey of 251 economists earlier this month by the National Association for Business Economics.

Friday's price action comes after talks between U.S. and Chinese trade representatives appeared to end without any breakthrough or success in de-escalating the so called "trade war" between the two.

Two days of talks between Washington and Beijing ended on Thursday with no major breakthrough as their trade war escalated with activation of another round of dueling tariffs on $16 billion worth of each country's goods.

The research theme this year involves change in market structure and Powell used that topic to elaborate on why shifts in concepts like the level of "full employment" and the neutral rate of interest justify gradual rate increases.