Dow at record above 27,000 as USA rate cuts look likely

Dow at record above 27,000 as USA rate cuts look likely

The comments come amidst heightened tensions between Powell and the president, who's repeatedly lashed out at the USA central bank for raising interest rates too frequently in 2018 - while also urging policymakers to cut rates at the upcoming July meeting.

President Donald Trump has repeatedly attacked the Fed for raising rates four times a year ago and has called for a full percentage point cut.

Lurking in the background, U.S. and Chinese trade officials held "constructive" talks on trade by phone on Tuesday, White House economic adviser Larry Kudlow said. This followed dimmed hopes over a Fed rate cut in the U.S. In mainland China, shares fell with benchmark Shanghai Composite down 0.18 percent.

Powell said on Wednesday that crosscurrents such as trade tensions and concerns about global growth have been weighing on the USA economic activity and outlook, the Xinhua news agency reported. The Federal Reserve Act allows for Fed governors to be removed - but only "for cause" and not policy differences.


"Many" Fed officials now believe a weakening global economy and rising trade tensions have strengthened the case for a rate cut, Powell wrote in a report released ahead of his appearance before Congress later on Wednesday.

Most experts dispute Trump's assertion that he has authority to either fire Powell or demote him from the chairman's post, and his attacks have raised alarms that he's undermining the Fed's long-recognized independence from political pressure.

"Apparent progress on trade turned to greater uncertainty, and our contacts in business and agriculture reported heightened concerns over trade developments", Powell said, noting that business investment, an important component of economic growth, "seems to have slowed notably" in recent months.

Mr Powell, in written testimony ahead of his appearance at the House of Representatives Financial Services Committee, said he expected continued USA growth.


Waters, who chairs the House Financial Services Committee, told Yahoo Finance that her intent in asking the question was to "get rid of any uncertainties in the markets and with Wall Street about what is going on".

Powell is appearing before the Senate Banking Committee on Thursday morning, where his two-day bi-annual testimony will conclude.

The chance of a 50 bps cut rose to 27.6% from 3.3% on Tuesday, according to CME Group's FedWatch tool. "And what I've said is the law clearly gives me a four-year term, and I intend to serve it". And inflation remains chronically below the Fed's target level. Economists expect the reduction will likely be a quarter-point. Investors still see a 100% likelihood of a rate cut this month.

Powell has been heavily criticised by President Donald Trump, but last night insisted he will not be forced out of the job. -China trade war and agreed to resume talks toward a deal that would meet the administration's demands to better protect USA technology.


"Economic momentum appears to have slowed in some major foreign economies, and that weakness could affect the United States economy".

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