Feds Jerome Powell signals openness to cut rates if needed on trade

first_img Comment Jerome Powell, chairman of the U.S. Federal ReserveAl Drago/Bloomberg Share this storyFed’s Jerome Powell signals openness to cut rates if needed on trade tension Tumblr Pinterest Google+ LinkedIn Email Featured Stories Sponsored By: Federal Reserve Chairman Jerome Powell signalled an openness to cut interest rates if necessary, pledging to keep a close watch on fallout from a deepening set of disputes between the U.S. and its largest trading partners.Referring to “trade negotiations and other matters,” Powell said that “we do not know how or when these issues will be resolved,” according to the text of a speech he’s set to deliver Tuesday in Chicago.“We are closely monitoring the implications of these developments for the U.S. economic outlook and, as always, we will act as appropriate to sustain the expansion, with a strong labor market and inflation near our symmetric 2 per cent objective,” Powell said in opening remarks at a conference at the Chicago Fed.Investors have aggressively increased bets the Fed will cut interest rates this year after President Donald Trump widened ongoing trade tensions when he threatened last week to slap new tariffs on Mexico unless it stemmed migrant flows to the U.S. The yield on 10-year U.S. Treasuries Monday fell below 2.1 per cent, the lowest since September 2017.Powell’s speech was dedicated mostly to the Fed’s yearlong goal of reviewing its monetary policy strategies, tools and communication practices.Related Stories:As Fed nears rate cut, policymakers debate how deep, and even ifFed’s Evans: ‘A couple’ of rate cuts needed to boost inflationOne reason for a Fed cut: Powell now fears too-low inflation“With the economy growing, unemployment low, and inflation low and stable, this is the right time to engage the public broadly on these topics,” Powell said.The two-day research conference is the centerpiece of the review. Fed officials and leading academics are set to debate whether they need to make changes in order to shore up inflation expectations and improve their defences for the purposes of fighting the next economic downturn, whenever it comes.The conference, which was announced in November, is taking place amid heightened volatility in financial markets, owing to increasing concerns about Trump’s threats to further restrict global trade. It also follows a string of government reports on consumer prices that have shown inflation drifting below the Fed’s 2 per cent target so far this year, which many economists fear will limit policy makers’ ability to stimulate the economy if necessary.In remarks earlier on Tuesday, Chicago Fed President Charles Evans brushed aside the idea the Fed needed to cut rates in response to market pressure. Evans votes on monetary policy this year.“With inflation being a little bit on the light side, there’s the capacity to adjust policy if that’s necessary, but the fundamentals for the economy continue to be solid,” Evans told CNBC television. “The consumer is solid. I think we have to think through what this really means.”Speaking Monday, St. Louis Fed President James Bullard, who also votes on the central bank’s interest-rate setting Federal Open Market Committee this year, became the first FOMC member to call for a rate cut, citing below-target inflation and the threat to economic growth posed by trade tensions.The FOMC next meets June 18-19 in Washington.Bloomberg.com Twitter Reddit Fed’s Jerome Powell signals openness to cut rates if needed on trade tension Second FOMC member to raise possibility Join the conversation → Facebook ← Previous Next → Bloomberg News Recommended For YouFTSE 100 slips on global nerves, pub chain Ei surgesEuropean shares fall as tech heavyweight SAP flags trade worriesChina copper smelters slash Q3 TC/RC floor, weigh output cuts -sourcesDollar slips on softer U.S. yields; Aussie shinesPing An-backed Lufax to ditch P2P lending amid regulatory woes – sources June 4, 201911:54 AM EDT Filed under News Economy What you need to know about passing the family cottage to the next generation Matthew Boesler and Christopher Condon More advertisement 0 Commentslast_img