Fed Chairman sets the stage for lower interest rates

On Wednesday, Fed Chairman Jerome Powell spoke to Congress, announcing the lingering risks to the US economy.

Politicians have noted a growing number of prerequisites for lower interest rates.

 

On Wednesday at the congressional hearings.

Fed Chairman Jerome Powell spoke to the Financial Services Committee of the US House of Representatives, which is part of the annual semi-annual report of the Fed chief on monetary policy.

The head of the central bank said “the uncertainty surrounding trade tensions and fears about the strength of the global economy,” which “continues to influence US prospects.”

According to Powell, the risks of a “widespread” global slowdown in economic growth remain, and the latest agreements of Washington and Beijing to return to the table of trade negotiations failed to eliminate uncertainty.

This situation continues to have a negative impact on the US economy, holding back growth and forcing businesses to refrain from large purchases, including fixed assets, holding back investments, as well as wage increases and price increases.

The slowdown in production and restrained inflation, which does not reach the target level of the central bank of 2%, also causes concern to officials.

At the Fed meeting on June 18-19, some politicians have already spoken in favor of lower rates, which can “mitigate the consequences” of a trade war with China.

Several Fed politicians also noted the impact of trade conflict on countries on making investment decisions by American manufacturers, not only now, but also “in the medium term,” according to the meeting’s minutes.

Manufacturers, they say, postpone big plans of spending and hiring and overestimate where and how they produce their goods because of the risks of a trade war.

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