Fed Chair Powell vows to ‘sustain the expansion’ but doesn’t commit to the deep interest rate cuts Trump wants
By Heather Long
August 23 at 10:00 AM
JACKSON HOLE, Wyo. — Federal Reserve Chair Jerome H. Powell said Friday that the trade war is a “complex, turbulent” situation and he vowed the central bank will “act as appropriate to sustain the expansion,” suggesting another interest rate cut may be coming but not the large decline President Trump has urged. “Our economy is in a favorable place," Powell said, according to prepared remarks, but he added that there are “significant risks," especially from trade policy uncertainty. Twice during his speech here at the Kansas City Fed’s annual monetary policy symposium, Powell reiterated that the Fed’s overriding goal is to ensure the economy continues to grow and the central bank would do what was necessary to make that happen. “Our challenge now is to do what monetary policy can do to sustain the expansion so that the benefits of the strong jobs market extend to more of those still left behind,” Powell said.
Trump has lashed out at the Fed almost daily, calling on Powell to lower interest rates a full percentage point from just shy of 2.25 percent now down to 1.25 percent, the type of action that is typically done when the economy is in a recession or dangerous situation. “Now the Fed can show their stuff!,” Trump tweeted shortly before Powell’s speech Friday morning.
In his remarks, Powell repeatedly characterized the U.S. economy as in a good place with low unemployment, solid growth and strong consumer spending, painting a picture of an economy that could possibly use a small boost but does not need massive aid. “The U.S. economy has continued to perform well overall, driven by consumer spending,” Powell said. “It will be appropriate at times for us to tilt policy one way or the other because of prominent risks.”
Wall Street investors now predict a 96 percent chance the Fed will cut rates by a quarter of a percentage point at its upcoming meeting in mid-September to about 2 percent. After Trump announced his latest plans to put more tariffs on nearly all Chinese imports ahead of the busy Christmas shopping season, investors briefly thought the Fed might do a more dramatic interest rate cut, but a number of Fed leaders have made it clear there is little support for that.
https://www.washingtonpost.com/business/2019/08/23/fed-chair-powell-vows-sustain-expansion-he-doesnt-commit-deep-interest-rate-cuts-trump-wants/
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