Fed's Powell, at the center of negotiations, is ready to react if trade war intensifies

US Federal Reserve Chairman Jerome Powell said on Tuesday that the US central bank was watching the impact of global trade developments on the US economic outlook and that it was ready to take action in the US. need to support an almost record expansion.

"We do not know how or when these problems will be solved. We are closely monitoring the implications of these developments for the US economic outlook and, as always, we will act appropriately to support this expansion, with a strong labor market and inflation close to our target of 2% symmetric ", a- he declared in a speech.

Powell's comments in anticipation of the "Conference on Money Strategy, Tools and Practices" come amid calls for increased demand for interest rate cuts by the Fed.

The WEC's FedWatch tool, which analyzes the probability of interest rate movements for future Fed meetings, is currently forecasting a 55.9% rate reduction in July, with 49.7% of traders predicting the policy rate Federal funds will increase from 2% to 2.25 percent range. Only 13.6% of traders believe that interest rates will remain in the current range of 2.25% to 2.5% by September.

In his speech, Powell stressed that policymakers would react if inflation was still low, but without specifying the measures the Fed would take. Core inflation is currently below the Fed's target of 2%, although it has risen slightly in April.

"In this context, a similar surprise, if it persisted, would bring us too close to the ELB," he said, referring to the lower effective limit of interest rates. "My FOMC colleagues and I owe it and take seriously the risk that inflation deficits that persist even in a robust economy may precipitate a downward drift difficult to stop inflation expectations."

However, despite the more accommodating pivot, Powell avoided any other specific problem related to the current economic situation.

The Fed has not reduced its interest rates since 2008, when it lowered the interbank lending rate to 0.25%, virtually zero, as a result of the financial crisis. Interest rates remained at this level until 2015, when the central bank began to tighten again. The Fed has raised rates nine times since 2015, including four times last year.

At the last meeting of the Federal Open Market Committee, Powell told reporters that policymakers were not convinced of the need to move forward.

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"We think that our political position is appropriate for the moment," he said at the time.