In recent weeks the Fed and its chairman, Jerome Powell, have signaled they’re prepared to lower rates if the outlook worsens. Just three months ago they were favoring a rate hike or no action.
President Trump nominated Jerome Powell in November 2017 to be the Federal Reserve chairman, but since then the president has frowned on his pick and the Fed for raising interest rates. to lower interest rates, and financial markets are screaming for a cut. This even though rates are historically low and the economy is sailing along, albeit with some recent gray clouds.Fed policymakers are expected to stand pat on rates after their two-day meeting Wednesday.
Trump has been relentless in excoriating the Fed and demanding that it reverse rate hikes made last year. Powell and his colleagues insist that Fed policy will be driven by economic data, and there are signs of slowing U.S. growth., and both government bond yields and inflation measures are signaling possible trouble ahead, caused in part by a resumption of tit-for-tat tariffs between the United States and China.
With greater uncertainties because of trade and inflation, however, experts say it’s reasonable for the Fed to guard against rising downside risks to the economy. Although policymakers typically cut rates after they gather evidence of a threatening recession, the Fed sought to get out ahead with rate cuts during the Asian financial crisis in the late 1990s.
Other analysts said it would have been better for Powell to say nothing rather than suggest a willingness to cut rates. Stock markets were still up for the year. And there weren’t indications that the U.S. economy had veered from its growth path, unless the Fed saw more trouble lurking that no one else had.
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