NEW YORK, July 17 (Reuters) - U.S. Federal Reserve Chairman Jerome Powell, discounting the risk that a trade war may throw a global recovery off track, said the economy is on the cusp of "several years" where the job market remains strong and inflation stays around the Fed's 2 percent target.
* Fed believes "best way forward is to keep gradually raising the federal funds rate"
* Inflation is "close" to the Fed's target and "the recent data are encouraging," Powell said
GENNADIY GOLDBERG, INTEREST RATE STRATEGIST, TD SECURITIES, NEW YORK
Theres not really anything in his opening comments to materially move rates here. Powell continues to point to gradual rate hikes, he does seem fairly upbeat on the economic situation. It does seem as though, at least in the prepared remarks, that risks are broadly balanced and there isnt a whole lot of mention of trade. So I think, net net, (theres) not really much here to change the outlook.
PHIL ORLANDO, CHIEF EQUITY MARKET STRATEGIST, AT FEDERATED INVESTORS, IN NEW YORK:
He slipped in maintaining the appropriate monetary policy. The $64,000 question is what do they consider to be the appropriate monetary policy? That is the conundrum here. If you look at the last set of dot plots we got at the last FOMC meeting and interpreted them literally, my sense is, it implying two more quarter-point hikes this year which would take the funds rate up to 2.5 percent, four more next year which would take the funds rate up to 3.5 percent and then two more in 2020 which would take the funds rate up to 4 percent. My best guess, knowing what I think I know about the economy, is that if the funds rate is at 4 percent two years from now the Fed has probably done too much and that increases the potential risk of pushing the economy into recession perhaps in the 2021 period."
MARKET REACTION STOCKS: Stocks pared losses slightly, the S&P was last trading down 0.05 percent.
BONDS: U.S. Treasury yields were little changed
FOREX: The U.S. dollar index pared gains ))