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Financial News: Powell Says Fed Will Act "As Appropriate" To

Powell Says Fed Will Act "As Appropriate" To Sustain Economic Expansion

06/04/2019 - 12:25:00 (RTTNews)

(RTTNews) - Amid growing concerns escalating global trade tensions could spark a recession, Federal Reserve Chairman Jerome Powell has pledged the central bank will take appropriate actions to sustain the U.S, economic expansion.

Powell mentioned recent developments involving trade negotiations and other matters in opening remarks at a Chicago Fed conference on Tuesday, acknowledging that the Fed does not know how or when these issues will be resolved.

"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 percent objective," Powell said.

The rest of Powell's speech focused on longer-run issues, but the Fed Chief's initial comments generated optimism about a potential interest rate cut and spurred a rally on Wall Street.

Powell's comments come after St. Louis Fed President James Bullard suggested in a speech on Monday that an interest rate cut "may be warranted soon" due in part to escalating global trade tensions.

"The door is now open to a rate cut discussion at the June meeting in two weeks," said FTN Financial chief economist Chris Low. "We'll see if anyone other than Jay Bullard is willing to step up and cut."

The Fed is scheduled to hold its next monetary policy meeting on June 18th and 19th, although CME Group's FedWatch Tool currently indicates only a 12.5 percent chance of a rate cut.

The FedWatch Tool suggests a rate cut is more likely at the following meeting in late July, with the tool currently pointing to a 49.7 percent chance the Fed will lower rates.

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