Economy

Maxine Waters Grills Fed Chair Powell on Trump - And Crypto

Maxine Waters Grills Fed Chair Powell on Trump - And Crypto

Federal Reserve Chairman Jerome Powell appeared in Congress Wednesday to begin two days of testimony to discuss potential fiscal policy changes and the state of the USA economy.

Although the United States economy expanded by a solid 3.1 percent in the first three months of the year, the Fed chief said that growth was based on factors, like exports, "that are not generally reliable indicators of ongoing momentum".

Fed Chair Powell provided a somewhat more dovish than expected speech, having that since the June FOMC meeting, uncertainties have continued to dampen the economic outlook, highlighting that growth appeared to have moderated in Q2, while momentum has slowed in major foreign economies in recent months. Until very recently, the chance of a modest quarter-point cut was put at 70% and a steep half-point cut at 30%.

Investors expect the Fed will cut its benchmark rate, now in a range between 2.25% and 2.5%, by a quarter percentage point at its 30-31 July meeting. President Donald Trump's trade wars have magnified uncertainties.

That change reflects two developments. And after a tepid job gain in May, U.S. employers sharply stepped up their hiring in June, an indication of the economy's durability.

But relentless pressure from President Trump for a rate cut could complicate matters for a Fed that prizes its independence. But he noted that "crosscurrents, such as trade tensions and concerns about global growth, have been weighing on economic activity and the outlook". Trump and Chinese President Xi Jinping declared a truce last month in what had threatened to become an escalating U.S. This became apparent after some Fed communication and a strong U.S. job report last week.

More news: Rain sends NZ semi into 2nd day

"The Q&A portion of today's testimony will likely be Mr. Powell's moment to talk down the prospect of a 50 basis points rate cut at the July meeting", O'Hare said.

The California Democrat started and ended her time with comments on President Trump, calling him "reckless" in her opening and deploring the Federal Reserve to resist his administration's "high-pressure tactics".

Fed Unsure What to Do About Facebook's Crypto TokenFed Chair Powell said that Facebook's crypto project raises "many concerns".

"I guess chairman Powell feels there is more downside risk to the economy and the Fed needs to accommodate that", said Kim Forrest, chief investment officer at Bokeh Capital Partners.

Until Friday, gold had been on a tear since Fed officials last month opened the door to a rate cut, boosting the appeal of the metal that doesn't pay interest. Trump said last week that "if we had a Fed that would lower interest rates, we would be like a rocket ship".


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