This archive report was first published on 23 August 2019.
Published on August 23, 2019, Federal Reserve Chair Jerome H. Powell indicated that the central bank remains willing to cut interest rates to keep the economy growing, despite President Trump's trade policies stoking uncertainty and posing risks to the economic outlook.
Speaking at the Federal Reserve Bank of Kansas City's annual symposium in Jackson, Wyoming, Mr. Powell said, "While monetary policy is a powerful tool that works to support consumer spending, business investment, and public confidence, it cannot provide a settled rule book for international trade."
Mr. Powell's remarks suggest that the Fed is willing to cut interest rates again, but his reluctance to clarify the timing or size of any move highlights the central bank's predicament. While unemployment is low and consumer spending is strong, Mr. Trump's trade conflict is weighing on manufacturing and roiling markets.
China announced on Friday that it would retaliate against Mr. Trump's next round of tariffs by increasing taxes on $75 billion worth of American products, including agricultural products, crude oil, and cars. Both countries plan to up their levies in September and December, which could exacerbate the economic harm from a trade war that is already causing financial pain across the globe.
Against this backdrop, some members of the policy-setting Federal Open Market Committee support rate cuts to shore up United States economic growth, while others want to adopt a wait-and-see approach to monitor how the situation plays out.
Mr. Trump, who regularly accuses the Fed of slowing the economy by raising rates in 2018 and has urged it to cut aggressively, lashed out at Mr. Powell after the remarks. "As usual, the Fed did NOTHING!" Mr. Trump said in a tweet. "My only question is, who is our bigger enemy, Jay Powel or Chairman Xi?"
