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The White House's trade policy is a big issue for the Federal Reserve, President Jerome Powell said in a speech on Friday.
Powell gave no clear indication of future interest rate cuts at a central bank rally in Jackson Hole, Wyoming. But he cited evidence of weakening global economic growth, suggesting that uncertainties stemming from the growing trade war between the United States and China contributed to the slowdown.
"We have a lot of experience in dealing with typical macroeconomic developments," Powell said. "But adjusting the uncertainty of trade policy to this framework is a new challenge: Defining trade policy is a matter for Congress and the administration, not the Fed."
Although "monetary policy is a powerful tool that helps support consumer spending, business investment and public confidence, it can not provide a set of rules for international trade," he said. added.
While unemployment and inflation in the US remain weak, the national economy is also slowing after last year's growth spurt, Powell said. At the same time, other major economies, notably Europe and China, are slowing down.
President Donald Trump has repeatedly criticized Powell more and more personally, accusing the Fed of undermining economic growth by not moving fast enough to reduce interest rates. The central bank last month reduces the federal funds rate for the first time since the 2008 financial crisis.
Just before Powell's speech, China announced that it would increase tariffs on US products in response to a previous tax hike on imports from China, announced by Mr. Trump this month. . The president quickly accused the Fed of taking action against the Fed. "My only question is who is our biggest enemy, Jay Powell or President Xi?"
Mr. Trump also stated that he had "ordered by this" to US companies to find new supply chains or to transfer their operations to the United States.
As if to prove Powell's point, the financial market sank Friday after the latest signs of commercial discord. The Dow lost more than 420 points, or 1.6%, with the S & P 500 and the Nadsaq also collapsed.
"The market is likely to end today due to the escalation of the trade war, which has already overshadowed Jackson Hole's speech," said Chris Zaccarelli, chief investment officer at the Independent Advisor Alliance.
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