Shares Rally as Fed Chairman Speaks: NPR
Federal Reserve Chairman Jerome Powell talks during a press conference on May 1 in Washington, D.C. He testifies to Congress this week about economic challenges.
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Federal Reserve Chairman Jerome Powell talks during a press conference on May 1 in Washington, D.C. He testifies to Congress this week about economic challenges.
Mark Wilson / Getty Images
Stocks rallied Wednesday as Federal Reserve Chairman Jerome Powell testified to challenges facing the US economy and adds expectations that the central bank will lower interest rates later this month.
The Fed had hinted at such a cut in June.
Since then, it has been shown that uncertainty about trading tensions and concerns about the strength of the world economy continue to weigh on the economic outlook in the United States, Powell said in prepared testimony to the House Financial Services Committee. "Inflationary pressure remains subdued."
Stock indexes jumped by more than half a percentage point in the opening minutes of trading on the outlook that the Fed will cut prices for the first time since the Great Recession. The Dow Jones Industrial Average was up to 150 points.
Powell stressed that the US economy is still growing, albeit at a slower pace, as a record-long expansion begins its 11th year. But he warned that business investment has slowed, possibly as a response to ongoing trade tensions and a decline in the world economy.
Last week, the Ministry of Labor reported stronger than expected job growth in June. But while unemployment remains close to record levels, job growth has slowed since last year.
The Fed Mayor also highlighted long-term challenges, including high and rising federal debt and relatively low labor force participation among Americans in their prime working years.
President Trump has repeatedly argued that the US economy would be faster if the Fed lowered interest rates.
"If we had a Fed that would lower interest rates, we would be like a rocket ship," he told reporters last week. "But we don't have a Fed that knows what they're doing."
Powell has emphasized the importance of the Fed to maintain its independence from political pressure.
