Thursday, July 11, 2019
Associated Press
WASHINGTON
Pointing to a weaker global economy, rising trade tensions and chronically low inflation, 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.
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, inflation has dipped further below the Fed’s annual target level.
The chairman’s remarks led investors to send stock prices up, bond yields down and the value of the U.S. dollar lower on expectations of lower interest rates.
The S&P 500 index briefly traded over 3,000 for the first time.
Testifying to the House Financial Services Committee, Powell was asked, as he has been before, what he would do if President Donald Trump tried to fire or demote him. Powell offered the same terse reply he’s given in the past when asked about Trump’s attacks on his leadership and the president’s insistence that he has authority to remove the chairman: Powell said he intends to serve out his full four-year term, which ends in early 2022.
The president has repeatedly accused Powell and the Fed of keeping credit too tight for too long and of thereby holding back the economy and the stock market. Most experts dispute Trump’s assertion that he has authority to either fire Powell or demote him from the chairman’s post, and his attacks have raised alarms that he’s undermining the Fed’s long-recognized independence from political pressure.