Fed chair Powell repeats vow to act 'as appropriate'

Andrew Cummings
September 10, 2019

Powell said. "We think that will enable people to be better served and drive costs out of the system, so it's important that we be open to that". Couple that with an overall slowdown in the global economy and Powell dropped a clue that the central bank's policymaking Federal Open Market Committee could take action when it meets again from September 17-18.

When the Fed met in late July, it agreed to implement its first rate cut in 10-and-a-half years. "The labor market continues to be the strongest point of data across the economic landscape, and that's not what has been the catalyst for the Fed shifting to an easing bias", added Merz.

"That has supported the economy, that is one of the reasons why the outlook is still a favourable one despite these crosswinds".

'Absolutely not, ' Powell said.

For months, Powell and his Fed colleagues have warned that trade tensions and slower global growth represent mounting risks to the US economy. He cited trade uncertainty, a slowdown in global growth in Germany, China and Europe, and muted inflation.

"Incoming data for the USA suggests that the most likely outlook for the U.S.is still moderate growth, a strong labor market, and inflation continuing to move back up", he said.

Economic uncertainty caused by trade policy is not something that central banks have a lot of experience dealing with, Powell said.

Powell was attacked once again earlier on Friday by the President, who again accused the Fed of failing to cut rates aggressively enough.

Navarro's rhetoric echoed President Trump, who tweeted on Friday: "Where did I find this guy Jerome?" Oh well, you can't win them all!' Trump wrote.

The Fed chairman was also asked about a controversial op-ed by former New York President William Dudley that implied the central bank, an independent agency, should consider allowing an escalation trade war to hurt Trump's re-election bid in 2020.

Powell said that sometimes it is easy to get a unanimous decision when the economy is sending clear signals but 'other times it is murky out there and there are a range of views.

'Political factors play absolutely no role in our process, and my colleagues and I would not tolerate any attempt to include them in our decision-making or our discussions, ' he said. "But this is one more piece of evidence that the Fed is behind the curve", said Bill Merz, head of fixed income research at U.S. Bank Wealth Management. The answer to that is, 'A hard no'.

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