US Fed's Powell says case for rate cut 'strengthened'

News June 20, 2019 No Comments

US Fed's Powell says case for rate cut 'strengthened'

WASHINGTON: US Federal Reserve chief Jerome Powell said on Wednesday (Jun 19) that many central bankers feel the case for an interest rate cut has “strengthened” but they want to see more data before moving.

After announcing the Fed had kept the benchmark lending rate unchanged, Powell said some central bankers think a rate cut will be needed if the economy evolves as they expect.

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“Uncertainties surrounding the outlook have clearly risen since our last meeting” and officials are “mindful of ongoing cross currents, including trade developments and concerns about global growth,” he told reporters following the meeting of the Fed’s policy-setting Federal Open Market Committee.

“While the baseline outlook remains favorable, the question is whether these uncertainties will continue to weigh on the outlook and thus call for additional monetary policy accommodation,” he said.

“Many FOMC participants now see that the case for somewhat more accommodative policy has strengthened.”

But he added it is important that monetary policy not react to “short term swings in sentiment.”

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President Donald Trump has been calling loudly for a rate cut, saying the Fed is undercutting his efforts to supercharge the economy, and he even hinted he might remove Powell from his post.

But the Fed chair said he believes the law is clear that he has a four-year term.

“I fully intend to serve it,” he said.

Trump on Tuesday also bashed European Central Bank chief Mario Draghi, saying his signal of more stimulus ahead would put the US at a disadvantage against a weaker euro, which would make American exports less competitive.

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Powell declined to wade into that debate or comment on the exchange rate, saying only that the central bank does not use interest rate policy to effect the American currency.

He said “we don’t target the dollar… we will target our domestic economic and financial conditions and not our exchange rate.”

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