- Federal Reserve Chairman Jerome Powell began two days of testimony to Congress on Wednesday amid heightened criticism of his tenure by the man who named him to the job: President Donald Trump.
- “What would you do if the president calls you and said, ‘I’m firing you. Pack up. It’s time to go’?” he was asked. “My answer would be no,” Powell said.
- In his written testimony, Powell points to troublesome trade and growth “crosscurrents” that have “reemerged” since the Fed’s May meeting.
- But relentless pressure from President Trump for a Fed rate cut could complicate matters for a central bank that prizes its independence.
Every sentence Federal Reserve Chairman Jerome Powell speaks to Congress this week is sure to be parsed by investors who expect — and hope — the Fed will cut interest rates later this month for the first time in a decade. Powell hinted strongly at a cut in testimony Wednesday before the House Financial Services Committee, saying: “Since our May meeting, however, [growth and trade] crosscurrents have reemerged, creating greater uncertainty.”
“Growth indicators from around the world have disappointed on net, raising concerns that weakness in the global economy will continue to affect the U.S. economy,” Powell continued. “These concerns may have contributed to the drop in business confidence.”
Powell began two days of testimony on Wednesday at a time when the economic picture seems mixed: The U.S. job market appears resilient. Consumer spending and home sales look solid. But the economy is likely slowing. President Donald Trump’s trade wars have magnified uncertainties. And inflation remains chronically below the Fed’s target level.
Powell and the Fed have made clear they’ll doto sustain the economic expansion — a message Wall Street traders have interpreted to mean a coming rate cut. Indeed, when the Fed’s policymakers met last month, they removed from their statement a reference to being “patient” about interest rates. Some Fed watchers have suggested that cutting rates this month would serve as a kind of insurance policy by the central bank against a potential economic downturn in the fall or early next year.