STRICTLY NO ARCHIVE RESALE/AUTHORIZED RE-USE BY AP'S BROADCAST AND DIGITAL OUTPUT ONLY
Washington - 10 July 2019
1. SOUNDBITE (English) Jerome Powell, Chairman Federal Reserve:
"At our June meeting, we indicated that in light of increased uncertainties about the economic outlook and muted inflation pressures we would closely monitor the implications of incoming information for the economic outlook and would act as appropriate to sustain the expansion. Many FOMC (Federal Open Market Committee) participants saw that the case for a somewhat more accommodative modern monetary policy -- stance had strengthened. Since then based on incoming data and other developments. It appears that uncertainties around trade tensions and concerns about the strength of the global economy continue to weigh on the U.S. economic outlook. Inflation pressures remain muted."
2. Medium wide cutaway of Powell testifying (PARTIALLY COVERS UPCOMING SOUNDBITE)
3. SOUNDBITE (English) Jerome Powell, Chairman Federal Reserve:
"The FOMC (Federal Open Market Committee) participants maintained that the target rate range for the federal funds rate at two and a quarter to two and a half percent in the first half of this year. At our January March and May meetings, we stated that we would be patient as we determined what future adjustments to the federal funds rate might be appropriate to support our goals of maximum employment and price stability. At the time of our May meeting, we were mindful of the ongoing crosscurrents from global growth and trade. But there was tentative evidence that these crosscurrents were moderating. The latest data from China and Europe were encouraging and there were reports of progress in trade negotiations with China. Our continued patient stance seemed appropriate and the committee saw no strong case for adjusting our policy rate."
Chairman Jerome Powell signaled Wednesday that the Federal Reserve is likely to cut interest rates late this month for the first time in a decade in light of a weakening global economy and rising trade tensions.
Delivering the central bank's semiannual report to Congress, Powell said that since Fed officials met last month, "uncertainties around trade tensions and concerns about the strength of the global economy continue to weigh on the U.S. economic outlook."
In addition, annual inflation has dipped further below the Fed's annual target level.
Powell's remarks triggered a stock market rally, with the Dow Jones industrial average up nearly 100 points in late-morning trading.
Economists suggested that Powell's message made a quarter-point rate cut a virtual certainty at the Fed's meeting this month, with many forecasting further rate cuts to come.
Many investors have put the odds of a rate cut this month at 100%.
The Fed's benchmark rate stands in a range of 2.25% to 2.5% after the central bank raised rates four times last year — action that incited public attacks on the Powell Fed from President Donald Trump.
Trump, who is counting on a strong economy for his re-election campaign, has called the Fed his biggest threat.
He contends that the central bank made a huge mistake by tightening credit last year and should be cutting rates now. Trump has argued that last year's rate hikes have held back economic growth and the stock market.
In his prepared remarks, Powell made no mention of the president's criticism. He did thank Congress for the "independence" it has given the Fed to operate free of political intrusion. But later, in the question-and-answer period, Democratic members of the House Financial Services Committee, made clear their discontent with Trump's attacks.
Rep. Maxine Waters, who leads the committee, declared that "this president has made it clear that he has no understanding or respect for the independence of the Federal Reserve." She also referred to published reports that Trump had discussed firing Powell.
Asked by Waters what he would do if Trump said he wanted to fire him, Powell replied, as he has in the past, that he intends to serve his full four-year term.
Powell's remarks Wednesday began two days of his testimony on Capitol Hill. On Thursday, he will address the Senate Banking Committee.
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