The "cross currents" weigh on the economy and the Fed "will act as appropriate"

Business investment in the United States has recently slowed in the face of uncertainty over the economic outlook, Federal Reserve Chairman Jerome Powell said Wednesday before the House House Financial Services Committee.

"Inflation is below the Federal Open Market Committee (FOMC) symmetric target of 2%, and cross currents, such as trade tensions and worries about global growth, weigh on economic activity and prospects, "said Powell in his testimony, recalling the central bank" will act appropriately "to support the current economic expansion.

The Fed chief also noted that business investment has slowed "notably," adding that the outlook has not improved in recent weeks. Powell will give his testimony at 10:00 am ET and answer questions from legislators.

The testimony prepared by Powell appeared to confirm expectations of lower market rates. Equity futures became positive after the publication of the remarks. The Dow Jones Industrial Average index was heading towards a gain of more than 100 points at the opening.

"There is a risk that low inflation will be even more persistent than we currently expect," said Powell, further reinforcing the need for rate cuts.

"Overall growth in the second quarter seems to be moderate," Powell said in prepared remarks. "Many FOMC participants have found that the arguments for a somewhat more accommodative monetary policy have been strengthened, and since then, according to new data and other developments, it appears that Uncertainties over trade tensions and concerns about the strength of the global economy continue to weigh on results. "US Economic Outlook."

The United States and China have been engaged in a trade war for more than a year. At the end of last month, the two countries agreed to resume trade negotiations with the aim of ending the conflict. At the same time, overseas data – especially from Europe – show a slowdown in economic activity.

Powell noted that the economy "performed relatively well" in the first half of 2019, as consumer spending rebounded in the second quarter after being weak in the first quarter.

Powell's testimony comes after the Fed opened the door to a rate cut at its previous monetary policy meeting in June.

The markets applauded the central bank's remarks as stock indexes climbed to record highs last week. Traders are also expecting a 100% probability of rate cut before the end of July, according to the CME Group's FedWatch tool.

Jeff Cox and Patti Domm of CNBC contributed to this report.

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