Powell Signals Fed Could Cut Rates Later This Month

WASHINGTON—Federal Reserve Chairman Jerome Powell signaled the central bank could cut interest rates when it meets later this month, indicating he and others believe the economy isn’t as strong as some believe.

Powell also told Congress he has no plans to leave the chairmanship even if President Trump, who has been critical, seeks to replace him. Powell’s comments came during a hearing by the House Financial Services Committee.

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Fed Chairman Jerome Powell.

During his testimony, the Fed said its Open Market Committee might lower rates in the coming months should the economy’s future remain uncertain or issues around trade uncertainty remain cloudy. 

The Fed’s current benchmark rate is a range between 2.25% and 2.5%.

“The bottom line for me is the uncertainties around global growth and trade continue to weigh on the outlook,” Powell told the committee, adding inflation has also remained persistently below the Fed target of 2% annually. Those conditions, he said, “strengthened the case for a somewhat more accommodative policy.”

Concerns Raised

While his overall assessment of the economy was positive, saying the “baseline outlook is for economic growth to remain solid,” Powell told Congress he and the Fed have concerns around a number of issues, including:

  • He said news of robust growth of 224,000 jobs has not changed the Fed’s outlook. Indeed, while some have called the jobs market “hot,” Powell said, “We don’t have any evidence for calling this a hot labor market. To call something hot, you need to see heat.”
  • He said a potential agreement between President Trump and Chinese President Xi on trade “doesn’t remove the uncertainty that we see as overall weighing on the outlook.”
  • Powell said, “There is a risk that weak inflation will be even more persistent than we currently anticipate.”

Not Packing Up

When asked by House Financial Services Committee Maxine Waters (D-CA) about what he would do were President Trump to call him and tell him to pack his stuff up and get out, Powell replied, “Of course, I would not do that.”

When Waters followed up by saying, “I can’t hear you,” Powell, who was appointed by Trump as Fed chairman, responded, "The answer would be, 'No’.”

Simultaneously with Powell’s testimony, the Fed also released minutes from its June meeting here.

Section: Standard
Word Count: 533
Copyright Holder: CUToday.info
Copyright Year: 2019
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