MNI POLICY: Fed's Powell: Worries Piling On Business Side

By Jean Yung

     WASHINGTON (MNI) - Worries continue to pile up on the business side of the

U.S. economy, Federal Reserve Chair Jay Powell told lawmakers Wednesday as he

laid out reasons for the Fed to cut rates as soon as this month. 

     The U.S. consumer and the job market are strong, he remarked. "The issue is

really more now on the business side where we see business confidence and

business investment weakening a bit."

     "The bottom line for me is the uncertainties around global growth and trade

continue to weigh on the outlook, and, in addition, inflation continues to be

muted," Powell said. 

     Ahead of the June FOMC meeting and since then, economic data in Europe and

Asia has "continued to disappoint," he said. Manufacturing, trade and investment

is "weak all around the world," in part reflecting trade policy uncertainty.  

     While the Trump administration's reopening of discussions with China last

month is a constructive step, "it doesn't remove the uncertainty we see as

overall weighing on the outlook," he said.  

     Meanwhile, the stronger-than-expected June jobs report did not alter his

economic outlook, Powell said. Despite a 3.7% unemployment rate that's near a

50-year low, there is "no basis for calling this a hot job market," the Fed

chair said. In particular, wages are not responding to the very tight labor

market. 

     "To call something hot, you need to see some heat," he said.

     Analysts are expecting the Fed to cut rates by 25 basis points at its July

meeting. Powell did not comment on whether a larger 50 basis cut would be

considered. 

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

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