Powell: Fed may cut rates, but can't solve trade war

Source: The Hill | August 23, 2019 | Sylvan Lane

Federal Reserve Chairman Jerome Powell suggested Friday that the central bank could soon cut interest rates amid rising fears of a recession, but warned that cheaper money would not protect the U.S. economy from President Trump’s trade battles.

In a Friday speech, Powell said the bank would “act as appropriate” to sustain a record stretch of economic growth now threatened by counter global headwinds. The chairman expressed confidence in the strength of the U.S. labor market and consumer spending, even as signals of an impending recession flash across the globe.

But Powell also warned that while the Fed could account for fallout from costly trade tensions, the bank cannot solve the uncertainty and anxiety triggered by the Trump’s trade conflicts.

“Setting trade policy is the business of Congress and the Administration, not that of the Fed,” Powell said at the Fed’s annual summit in Jackson Hole, Wyo.

“While monetary policy is a powerful tool that works to support consumer spending, business investment and public confidence, it cannot provide a settled rulebook for international trade.”


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