In Chicago on June 4th, Fed Chair Jerome Powell stated that the Fed is willing to respond to threats to the U.S. economy.
The remarks from Powell gave investors a hint that the Federal Reserve will cut rates again this year, confirming what was mostly suspected. There is concern that the expanding U.S. economy, which next month will be the longest on record, faces recession because of trade disputes revolving around tariffs.
Charles Evans, head of the Chicago regional bank, said that there is the possibility to adjust policy if needed.
President Trump has imposed tariffs on China and Mexico. Mexico’s tariff starts out at 5% and can peak to 25%.
This has created risks with trade uncertainty and it appears that the Fed is ready to respond.
A Fed cut may be warranted.
Inflation is below the Fed target. Inflation is a policy challenge for the Fed. The goal is maximum employment and stable prices. The Fed target on inflation is 2%. The Fed concerns revolve around that 2% target.
The Chicago conference kicked off listening sessions that will be held around the country.
Sources for this post.
Powell’s opening remarks in Chicago on June 4th
Mr. Powell’s remarks helped the markets with an upside day.
The Fed will closely monitor ongoing trade tensions. Nominal interest rates are at historic lows.