Powell, Waren Trade Trade, suggests the Fed could turn to interest rates if needed

The president's actions in trade have left the Fed in a difficult situation. Growth remains above its long-term trend and the labor market is strong, which would argue against rate cuts. In addition, trade disputes could be resolved quickly, eliminating a major obstacle to further expansion. But inflation is already low and, if the global slowdown is reflected in the US economy, Fed rates remain historically low, which could argue for a quick and decisive action, as the ammunition of the central bank to fight the recession are limited.

Mr. Trump himself pushed the Fed to cut rates, even going so far as to oppose the central bank to China.

"China is boosting its economy significantly while keeping interest rates low. Our Federal Reserve has raised interest rates continuously, even with very low inflation, and introduced a very high dose of quantitative tightening, "Trump said in a tweet on April 30. He said the economy would grow like a "rocket". "If the central bank reduces its rates.

This also poses a problem for the central bank, which is independent of the White House. A rate cut might seem political, even if it stems from a change in the economic landscape. Officials repeatedly said that they would make policy decisions based on economic prospects and that politics would not influence them in any way.

After the Fed raised its rates nine times since 2015, investors began to grow late last year, fearing that monetary policy would be too restrictive and thus likely to lead to beginning of a recession. This allowed equity markets to fall sharply as the S & P 500 lost nearly 14% in the last three months of 2018.

Then, in early January, the central bank suddenly changed its tone compared to previous projects to continue raising interest rates this year. On the contrary, she stressed that she would remain patient, flexible and attentive to the signals sent by the financial markets.

Some analysts are wondering whether further cuts from the Fed would trigger a similar reaction now. A decade after economic expansion, lower interest rates may not significantly improve earnings prospects for companies, the economy or the stock market, they say.