US stocks hit record as Fed chair announces rate cuts

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Reuters

US stocks hit a record high after the central bank chairman hinted that interest rates would be reduced to support growth.

Federal Reserve Chairman Jerome Powell said "uncertainties about the outlook have increased in recent months".

The S & P 500 benchmark exceeded 3,000 points for the first time, while the Dow Jones and Nasdaq rose nearly 1%. The dollar fell.

Mr. Powell, who testified at a hearing in Washington, was pressured by Donald Trump to cut rates.

Although Mr Powell told the House 's Financial Services Committee that he expected a continuation of US growth, he warned, however, of the economic weakness of the United States. other major economies and a slowdown in business investment, motivated by the concerns of the trade war.

"Concerns about the strength of the global economy continue to weigh on the US outlook," Powell said.

"The apparent progress in trade has resulted in greater uncertainty and our contacts in the commercial and agricultural sectors have signaled increased concerns about the evolution of trade."

The comments come despite the high numbers on US employment last week and the easing of trade tensions with China.

Analysis by Andrew Walker, BBC Economic Correspondent

As always in the remarks of the chairman of the Federal Reserve, there was no commitment to reduce interest rates.

But the focus on economic uncertainties and below-target inflation indicates a growing probability that the Fed will do so.

Among the concerns he has raised is the slowdown in some foreign economies that could affect the United States. He also mentioned "government policy issues that still need to be resolved".

His reference to trade developments was partly about tensions between the United States and China. But there was one element on this list that the United States should not address: Brexit.

He did not explain the reasons, but the fact that he reported there is fears that the departure of the UK from the EU could have a negative impact on the EU. American economy.

The Fed has maintained its current overnight rate in a range of 2.25% to 2.50% since December. Mr. Powell had first opened the door to a rate cut in comments made last month.

"Powell is putting it in place, certainly for a rate cut in July," said Jack Ablin, investment director at Cresset Capital.

And Patrick O. Hare, an badyst at Briefing.com, said that Mr. Powell's comments "gave the market what he was looking for".

Financial markets indicate that the Fed, at its meeting on July 31, will lower interest rates by 25 basis points, although some badysts have considered the possibility of a larger cut.

His appearance at Capitol Hill comes at a sensitive time for the Fed and Mr. Powell personally, President Donald Trump has launched a series of tweets not to lower interest rates and unnecessarily slow the economy.

At the same time, some criticize Mr. Trump's policies, including rising rates and his unpredictable approach, to increase economic risks.