Federal Reserve Chairman Jerome Powell speaks during a news conference on May 1 in Washington, D.C. He is testifying before Congress this week about economic challenges.
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Mark Wilson/Getty Images
Federal Reserve Chairman Jerome Powell speaks during a news conference on May 1 in Washington, D.C. He is testifying before Congress this week about economic challenges.
Mark Wilson/Getty Images
Stocks rallied Wednesday as Federal Reserve Chairman Jerome Powell testified about challenges the U.S. economy faces, adding to expectations that the central bank will cut interest rates later this month.
The Fed had hinted at such a cut in June.
Since then, “it appears that uncertainties around trade tensions and concerns about the strength of the global economy continue to weigh on the U.S. economic outlook,” Powell said in prepared testimony for the House Financial Services Committee. “Inflation pressures remain muted.”
Stock indexes jumped by more than half a percentage point in the opening minutes of trading on the prospects that the Fed will cut rates for the first time since the Great Recession. The Dow Jones Industrial Average was up 150 points.
Powell stressed that the U.S. economy is still growing, albeit at a slower pace, as a record-long expansion begins its 11th year. But he cautioned that business investment has slowed, possibly as a response to ongoing trade tensions and a slowdown in the global economy.
Last week, the Labor Department reported stronger-than-expected job growth in June. But while unemployment remains at near-record lows, job growth has slowed since last year.
The Fed chairman also highlighted longer-term challenges, including high and rising federal debt and relatively low labor-force participation among Americans in their prime working years.
President Trump has repeatedly argued that the U.S. economy would be growing faster if the Fed lowered interest rates.
“If we had a Fed that would lower interest rates, we’d be like a rocket ship,” he told reporters last week. “But we don’t have a Fed that knows what they’re doing.”
Powell has stressed the importance for the Fed of maintaining its independence from political pressure.
Article source: https://www.npr.org/2019/07/10/740219700/fed-chairman-powell-hints-at-interest-rate-rate-cut-stocks-rally?utm_medium=RSS&utm_campaign=news