MNI POLICY: Fed Powell: Uncertainties May Call For Lower Rates

By Jean Yung

     WASHINGTON (MNI) - Federal Reserve Chair Jay Powell on Tuesday said lower

U.S. interest rates may be needed to offset the growing risk that trade tensions

and global economic uncertainties cause a broader slowdown. 

     He reiterated last week's FOMC policy guidance, saying policymakers will

"closely monitor the implications of incoming information for the economic

outlook and will act as appropriate to sustain the expansion." 

     "Many FOMC participants judge that the case for somewhat more accommodative

policy has strengthened. But we are also mindful that monetary policy should not

overreact to any individual data point or short-term swing in sentiment," he

said in remarks prepared for the Council on Foreign Relations in New York. 

     "The question my colleagues and I are grappling with is whether these

uncertainties will continue to weigh on the outlook and thus call for additional

policy accommodation." 

     The baseline outlook "remains favorable" but inflation is expected to

return to 2% at a slower pace than forecast earlier this year, he said. "The

risks to this favorable baseline outlook appear to have grown."

     Just over the past two months, crosscurrents in the economic outlook have

reemerged: "with apparent progress on trade turning to greater uncertainty and

with incoming data raising renewed concerns about the strength of the global

economy."

     Business contacts are reporting rising concerns over trade developments at

the same time that confidence and investment are falling, he said. 

--MNI Washington Bureau; +1 202-371-2121; email: jean.yung@marketnews.com

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