- Title: Fed's mixed signals on next move send Wall Street lower
- Date: 18th September 2019
- Summary: WASHINGTON, D.C., UNITED STATES (SEPTEMBER 18, 2019) (UNRESTRICTED POOL) U.S. FEDERAL RESERVE CHAIRMAN, JEROME POWELL, APPROACHING PODIUM (SOUNDBITE) (English) U.S. FEDERAL RESERVE CHAIRMAN, JEROME POWELL, SAYING: "Good afternoon everyone, and welcome. My colleagues at the Federal Reserve and I are dedicated to serving the American people. We do this by steadfastly pursuing the goals Congress has given us, maximum employment, and stable prices. We are committed to making the best decisions we can, based on facts and objective analysis. Today, we decided to lower interest rates. As I will explain shortly, we took this step to help keep the U.S. economy strong in the face of some notable developments, and to provide insurance against ongoing risks. The U.S. economy has continued to perform well. We are into the 11th year of this economic expansion, and the baseline outlook remains favorable. The economy grew at a 2.5% pace in the first half of the year. Household spending, supported by a strong job market, rising incomes, and solid consumer confidence, has been the key driver of growth. In contrast, business investment and exports have weakened amid falling manufacturing output. The main reasons appear to be slower growth abroad and trade policy developments, two sources of uncertainty that we've been monitoring all year." POWELL SPEAKING (SOUNDBITE) (English) U.S. FEDERAL RESERVE CHAIRMAN JEROME POWELL, SAYING: "You know, I think, if you look at the U.S. economy, U.S. economy has generally performed roughly as expected, roughly. Consumer spending at a healthy clip. I'd say, business fixed investment and exports have weakened further, and I'd say the manufacturing PMI suggests more weakness ahead. The labor market still strong now, so, generally, that is the same. I think if you look at the global economy, I think has is weakened further in the EU and China, and I think you know trade policy developments have been a big mover of markets and of sentiment during that intermediate period. So, that's why I think what's... that's what's happened over the intervening period. And, you know, different people around the table have different perspectives, as you as you, obviously, know." POWELL SPEAKING (SOUNDBITE) (English) U.S. FEDERAL RESERVE CHAIRMAN, JEROME POWELL, SAYING: "You know, if you look at the things we're monitoring, particularly global growth and trade developments, global growth has continued to weaken. I think it's weakened since our last meeting. Trade developments have been up and down and then up, I guess, or back up perhaps over the course of this intervening period. In any case, they've been quite volatile. So, we do see those risks as actually more heightened now. We're gonna be watching that carefully. We're also going to be watching the U.S. data quite carefully, and we'll have to make an assessment as we go." REPORTERS LISTENING (SOUNDBITE) (English) U.S. FEDERAL RESERVE CHAIRMAN, JEROME POWELL, SAYING: "As our statement also highlights, though, there are risks to this positive outlook, due particularly to weak global growth and trade developments, and if the economy does turn down, then a more extensive sequence of rate cuts could be appropriate. We don't see that. It's not what we expect, but we would certainly follow that path if it became appropriate." REPORTERS LISTENING (SOUNDBITE) (English) U.S. FEDERAL RESERVE CHAIRMAN, JEROME POWELL, SAYING: "So we're not, as I mentioned, we're not... we don't see a recession. We're not forecasting a recession, but we are adjusting monetary policy in a more accommodative direction to try to support what is in fact a favorable outlook." REPORTERS LISTENING (SOUNDBITE) (English) U.S. FEDERAL RESERVE CHAIRMAN, JEROME POWELL, SAYING: "We don't, we have nothing to do with setting trade policy or negotiating trade agreements. We're supposed to be reacting on behalf of the American economy to support maximum employment and stable prices. So, we need to look through what is a pretty volatile situation. So that means not overreacting quickly. It means not under reacting too, so that's really what we're trying to do. And, you know, I would say the outlook is positive in the face of these crosswinds we've felt, and so to some extent, I do believe that our shifting to a more accommodative stance over the course of the year has been one of the reasons why the outlook has remained favorable." REPORTERS LISTENING (SOUNDBITE) (English) U.S. FEDERAL RESERVE CHAIRMAN, JEROME POWELL, SAYING: "You mentioned negative interest rates. So negative interest rates is something that we looked at during the financial crisis, and chose not to do. We chose to... After we got to the effect of a lower bound, we chose to do a lot of aggressive forward guidance, and also large-scale asset purchases. And those were the two unconventional monetary policy tools that we used extensively. We feel that they worked fairly well. We did not use negative rates. And I think if we were to find ourselves at some future date again at the effective lower bound, again not something we were expecting, then I think we would look at using large-scale asset purchases and forward guidance. I do not think we'd be looking at using negative rates. I just don't think those will be at the top of our list." PAN FROM REPORTERS TO POWELL LEAVING POWELL LEAVING
- Embargoed: 2nd October 2019 20:51
- Keywords: U.S. central bank sustain a decade-long economic expansion Federal Reserve quarter of a percentage point Kevin Heal interest rates Argus Research Jerome Powell cut interest rates
- Location: WASHINGTON, D.C., + NEW YORK, NEW YORK, UNITED STATES
- City: WASHINGTON, D.C., + NEW YORK, NEW YORK, UNITED STATES
- Country: USA
- Topics: Economic Events
- Reuters ID: LVA001AX6RZ2F
- Aspect Ratio: 16:9
- Story Text: The U.S. Federal Reserve on Wednesday (September 18) delivered a widely expected interest rate cut aimed at sustaining a record-long economic expansion, but gave few hints of whether or when it could reduce borrowing costs further.
The U.S. economic outlook is "favorable," with labor markets strong and inflation likely to return to the Fed's 2% inflation goal, Fed Chair Jerome Powell said in a news conference after the decision was announced.
But Fed policymakers decided to cut rates, he said, "to provide insurance against ongoing risks" including weak global growth and resurgent trade tensions.
(Produced by Aleksandra Michalska)
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