Powell keeps Wall St. rate cut hopes intact

Credit: Reuters Studio
Published on September 6, 2019 - Duration: 01:46s

Powell keeps Wall St. rate cut hopes intact

The Federal Reserve will act "as appropriate" to keep the U.S. economy going amid a growing threat the U.S trade war with China could further slow the economy, Fed Chairman Jerome Powell said on Friday.

Conway G.

Gittens has the details.

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Powell keeps Wall St. rate cut hopes intact

An escalating U.S.-China trade war is putting increased pressure on Federal Reserve Chairman Jerome Powell to act, and in a Friday speech in Switzerland he said this: SOUNDBITE (ENGLISH) FEDERAL RESERVE CHAIRMAN JEROME POWELL, SAYING: "We don't do trade...it's not a responsibility of the Fed but I think it is the case that uncertainty around trade policy is causing some companies to hold back now on investment and so our obligation is to use our tools to support the economy, and that's what we'll continue to do." Investors heard that as a signal Powell is worried enough to cut interest rates, but not by much... holding to expectations the Fed will go ahead with a quarter-point ease.

Powell noted that U.S. consumer spending is strong, but that a slowdown in business spending is hurting the global economy.

He pledged to "act as appropriate" to make sure America's record-long economic expansion stays on track.

SOUNDBITE (ENGLISH) FEDERAL RESERVE CHAIRMAN JEROME POWELL, SAYING: "Our main expectation is not at all that there'll be a recession.

I did mention though that there are these risks and we're monitoring them very carefully and we're conducting policy in a way that we'll address them.

But no, I wouldn't see a recess as the most likely outcome for the United States or for the world economy for that matter." The decision to cut rates will come down to voting members of Federal Reserve Board.

But that committee is split.

Some on the Fed look at the strength in the U.S. economy and question whether rates need to be lowered at all, while others look at the trade war between the U.S. and China and want more than a quarter-point rate cut.

President Trump, who nominated Powell for the job and chastises him seemingly at every turn, criticized the Fed for being too fast at raising rates and too slow at lowering them.

Which way will the Fed go?

Powell and his fellow committee members will make a decision at a meeting later this month.

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