Please ensure Javascript is enabled for purposes of website accessibility
Fed Chairman Signals That Rate Cut Could Happen Soon
gvw_ap_news
By Associated Press
Published 6 years ago on
July 10, 2019

Share

WASHINGTON — Chairman Jerome Powell signaled Wednesday that the Federal Reserve is likely to cut interest rates late this month for the first time in a decade in light of a weakening global economy and rising trade tensions.

Powell said that since Fed officials met last month, “uncertainties around trade tensions and concerns about the strength of the global economy continue to weigh on the U.S. economic outlook.”
Delivering the central bank’s semiannual report to Congress, Powell said that since Fed officials met last month, “uncertainties around trade tensions and concerns about the strength of the global economy continue to weigh on the U.S. economic outlook.” In addition, annual inflation has dipped further below the Fed’s annual target level.
Powell’s remarks triggered a stock market rally, with the Dow Jones industrial average up nearly 100 points in late-morning trading.
Economists suggested that Powell’s message made a quarter-point rate cut a virtual certainty at the Fed’s meeting this month, with many forecasting further rate cuts to come.
Paul Ashworth, chief U.S. economist at Capital Economics, said he thinks economic growth will slow below a 1% annual rate in the second half of this year, which he thinks will lead to additional quarter-point cuts in December and then March.
Ashworth said a July rate cut would be “insurance against the downside risk that Fed officials believe have mounted in recent months.”

Powell Doesn’t Mention the President’s Criticism

Many investors have put the odds of a rate cut this month at 100%. The Fed’s benchmark rate stands in a range of 2.25% to 2.5% after the central bank raised rates four times last year — action that incited public attacks on the Powell Fed from President Donald Trump.
Trump, who is counting on a strong economy for his re-election campaign, has called the Fed his biggest threat. He contends that the central bank made a huge mistake by tightening credit last year and should be cutting rates now. Trump has argued that last year’s rate hikes have held back economic growth and the stock market.
In his prepared remarks, Powell made no mention of the president’s criticism. He did thank Congress for the “independence” it has given the Fed to operate free of political intrusion. But later, in the question-and-answer period, Democratic members of the House Financial Services Committee, made clear their discontent with Trump’s attacks.
Rep. Maxine Waters, who leads the committee, declared that “this president has made it clear that he has no understanding or respect for the independence of the Federal Reserve.” She also referred to published reports that Trump had discussed firing Powell.
Asked by Waters what he would do if Trump said he wanted to fire him, Powell replied, as he has in the past, that he intends to serve his full four-year term.

 

U.S. Economic Landscape Is Mixed

Powell’s remarks Wednesday began two days of his testimony on Capitol Hill. On Thursday, he will address the Senate Banking Committee.

The job market appears resilient, but economic growth is slowing. Many forecasters predict growth has slowed to an annual rate of around 2% in the just-completed April-June quarter.
At the moment, the U.S. economic landscape is a mixed one: The job market appears resilient, but economic growth is slowing. Many forecasters predict that growth has slowed to an annual rate of around 2% in the just completed April-June quarter.
In his testimony, Powell said the economy has fared reasonably well over the first half of the year. But he noted that “crosscurrents, such as trade tensions and concerns about global growth, have been weighing on economic activity and the outlook.”
He said that growth in business investment “seems to have slowed notably,” possibly because of concerns over slowing global growth and the trade battle between the Trump administration and China.
The Fed chairman told the House committee that he thinks average worker pay isn’t rising fast enough to accelerate low inflation, even with the unemployment rate near a five-decade low. An absence of inflation pressure makes it easier for the Fed to cut short-term rates.

Fed Hasn’t Cut Rates Since 2008

Referring to rates, Powell repeated a pledge the Fed made in its June policy statement that officials would “act as appropriate to sustain the expansion.” But notably, he added that “many” Fed official saw that the case for a looser monetary policy “had strengthened.”
The Fed hasn’t cut rates since 2008 at the height of the financial crisis.
Trump and Chinese President Xi Jinping declared a truce last month in what had threatened to become an escalating U.S.-China trade war and agreed to resume talks toward a deal that would meet the administration’s demands to better protect U.S. technology. That step eased fears that Trump would extend punitive tariffs to an additional $300 billion in Chinese goods, in the process inviting retaliation from Beijing on American exports and likely weakening both nations’ economies.
And last week the government reported that after a tepid job gain in May, U.S. employers sharply stepped up their hiring in June, an indication of the economy’s durability.
A wild card in the Fed’s decision-making has been Trump’s highly unusual public pressure on the central bank to cut rates sharply. Trump’s attacks have raised alarms that he is undermining the Fed’s long-recognized independence from political pressure.

DON'T MISS

UN Agency Closes Its Remaining Gaza Bakeries as Food Supplies Dwindle Under Israeli Blockade

DON'T MISS

Hooters Goes Bust and Files for Bankruptcy Protection

DON'T MISS

Can CEMEX Dig a 600-Fit Hole and Not Harm the River? Arambula Says No and Writes a Bill

DON'T MISS

Valley Crime Stoppers’ Most Wanted Person of the Day: Destiny Christine Brown

DON'T MISS

Three Missing Fresno Teens Found Safe After Nine Days

DON'T MISS

State Center Trustees Vote for Special Interest Giveaway Over Students: Opinion

DON'T MISS

Lakers Hold Off Rockets With 6 3-Pointers Apiece From Dorian Finney-Smith, Gabe Vincent

DON'T MISS

Athletics Bat Boy Stewart Thalblum Takes Down Drone in Left Field

DON'T MISS

Prosecutors Directed to Seek Death Penalty Against Luigi Mangione

DON'T MISS

NFL Postpones Tush Push Decision but Passes Other Rule Changes, AP Source Says

UP NEXT

Athletics Bat Boy Stewart Thalblum Takes Down Drone in Left Field

UP NEXT

NFL Postpones Tush Push Decision but Passes Other Rule Changes, AP Source Says

UP NEXT

March Madness: It’s South Carolina vs. Texas and UCLA vs. UConn in Women’s Final Four

UP NEXT

Major Layoffs Begin at Health Agencies That Track Disease and Regulate Food

UP NEXT

U.S. Bank Executive Terry Dolan Dies in Plane Crash Near Minneapolis

UP NEXT

Top Vaccine Official Resigns From FDA, Criticizes RFK Jr. for Promoting Misinformation, Lies

UP NEXT

Utah Becomes the First State to Ban Fluoride in Public Drinking Water

UP NEXT

Wilmer Flores’ 3-Run Homer in the 9th Inning Propels Giants to Victory Over Reds

UP NEXT

Democrats’ Popularity Plummets, yet Midterm Prospects Remain Strong

UP NEXT

USDA Explores Why US Egg Shortage Contrasts with Canada’s Abundant Supply

Valley Crime Stoppers’ Most Wanted Person of the Day: Destiny Christine Brown

2 hours ago

Three Missing Fresno Teens Found Safe After Nine Days

2 hours ago

State Center Trustees Vote for Special Interest Giveaway Over Students: Opinion

3 hours ago

Lakers Hold Off Rockets With 6 3-Pointers Apiece From Dorian Finney-Smith, Gabe Vincent

3 hours ago

Athletics Bat Boy Stewart Thalblum Takes Down Drone in Left Field

3 hours ago

Prosecutors Directed to Seek Death Penalty Against Luigi Mangione

3 hours ago

NFL Postpones Tush Push Decision but Passes Other Rule Changes, AP Source Says

3 hours ago

March Madness: It’s South Carolina vs. Texas and UCLA vs. UConn in Women’s Final Four

3 hours ago

Kings County Authorities Recover Stolen Tractor. Suspect Faces Prop 36 Penalty

4 hours ago

Americans Rate Canada, Japan Most Favorably. Israel Sparks Record Partisan Divide: Gallup

4 hours ago

UN Agency Closes Its Remaining Gaza Bakeries as Food Supplies Dwindle Under Israeli Blockade

DEIR AL-BALAH, Gaza Strip — The U.N. food agency is closing all of its bakeries in the Gaza Strip, officials said Tuesday, as supplies dwind...

7 minutes ago

Palestinians receive bags of flour and other humanitarian aid distributed by UNRWA, the U.N. agency helping Palestinian refugees in Jabaliya, Gaza Strip on Tuesday, April 1, 2025. (AP/Jehad Alshrafi)
7 minutes ago

UN Agency Closes Its Remaining Gaza Bakeries as Food Supplies Dwindle Under Israeli Blockade

July 27, 2017, shows a Hooters sign at a restaurant in Hialeah, Fla. (AP File)
15 minutes ago

Hooters Goes Bust and Files for Bankruptcy Protection

27 minutes ago

Can CEMEX Dig a 600-Fit Hole and Not Harm the River? Arambula Says No and Writes a Bill

Destiny Christine Brown is Valley Crime Stoppers' Most Wanted Person of the Day for April 1, 2025. (Valley Crimes Stoppers)
2 hours ago

Valley Crime Stoppers’ Most Wanted Person of the Day: Destiny Christine Brown

Three Fresno teenagers reported missing on March 19, 2025, were found safe on Friday, March 28, 2025, after one called a parent to arrange their pickup. (Fresno PD)
2 hours ago

Three Missing Fresno Teens Found Safe After Nine Days

3 hours ago

State Center Trustees Vote for Special Interest Giveaway Over Students: Opinion

3 hours ago

Lakers Hold Off Rockets With 6 3-Pointers Apiece From Dorian Finney-Smith, Gabe Vincent

3 hours ago

Athletics Bat Boy Stewart Thalblum Takes Down Drone in Left Field

Help continue the work that gets you the news that matters most.

Search

Send this to a friend