Powell Signals Looming Rate Cuts

Jul 10, 2019
Federal Reserve Chairman Jerome Powell told Congress that while the economy performed "reasonably well" during the first half of the year, low inflation and economic "crosscurrents" are weighing on activity.

Powell testified that the outlook remains solid, but economic momentum has slowed—signaling that cuts to benchmark interest rates could come as soon as this month.

Powell last month said Fed officials are changing their interest rate outlook due to uncertainty over trade and the strength of the global economy. Following four federal funds rate increases in 2018, financial markets now anticipate rate cuts as the 10-year economic expansion—the longest in U.S. history—faces increased headwinds.

While Powell wrapped up his testimony before the House Financial Services Committee, the Fed released the minutes of last month's meeting of the rate-setting Federal Open Market Committee. According to the minutes, "several participants" said a near-term rate cut would help cushion against future adverse economic shocks.

The FOMC's next meeting is slated for July 30-31. Powell is scheduled to be back on Capitol Hill today to testify before the Senate Banking Committee.