WASHINGTON — Federal Reserve Chairman Jerome Powell signaled Wednesday that the Fed could soon cut interest rates, sending stocks higher as the benchmark S&P 500 stock index briefly traded above 3,000 for the first time.

Powell, testifying before the House Financial Services Committee, highlighted ongoing risks to the U.S. economy from President Donald Trump’s trade war and a global economic slowdown, suggesting a cut may be likely when the Fed meets again later this month.

That the Fed is considering a rate cut at a moment when the U.S. economy is strong and job market gains are solid underscores Powell and his colleagues’ concern about the future of a record economic expansion. The Fed expects unemployment to remain low and inflation to gradually increase, but Powell said that “uncertainties around trade tensions and concerns about the strength of the global economy continue to weigh on the U.S. economic outlook.”

The Fed, which has not cut rates since slashing them nearly to zero during the financial crisis, has been under pressure from Trump to lower borrowing costs. The president has called the Fed the biggest risk to the U.S. economy and has said repeatedly that Powell does not know what he’s doing.

“Let’s take a look at the economy and let that be the report card,” Powell said when asked about the president’s criticism, pointing to the record-long expansion and low unemployment.

Powell has insisted that the Fed will not bend to political pressure and will do what is needed to sustain the expansion. His testimony pushed markets higher as investors ignored possible economic storm clouds and cheered the increased likelihood that the Fed would soon lower borrowing costs.

Falling interest rates lift stocks for several reasons, even when they come amid mounting economic risks. They lower the returns on new investments in bonds, the main alternative to stocks for many investors. That makes stocks look more attractive to investors. A rate cut also makes it cheaper for consumers and companies to borrow, and that can buck up economic activity and help corporate profits.

The S&P 500 is up 19.4% in 2019, after already enjoying one of the longest bull markets on record. Since the climb began in March 2009, the index has more than quadrupled. Stocks closed higher, though the S&P had retreated to 2,993.07 by the end of trading.

“You’ve got some modest growth, you’ve got moderate inflation, you’ve got a decent labor market, and you’ve got valuations in the market that aren’t stretched,” said Scott Wren, senior global equity strategist at the Wells Fargo Investment Institute.

The Fed’s worries now are about looming risks to the economy. Powell told lawmakers that “uncertainties about the outlook have increased in recent months,” adding that “a number of government policy issues have yet to be resolved, including trade developments, the federal debt ceiling and Brexit,” referring to Britain’s negotiations to exit the European Union.

The federal debt ceiling may need to be raised early this fall for the government to borrow more money and avoid default.

The United States and China have agreed to restart trade negotiations, but Powell said that did not eliminate the economic risks emanating from the dispute, which has begun to hurt confidence and business spending around the globe. Trump has already placed tariffs on $250 billion worth of Chinese goods and China has retaliated against American products. A resolution is far from certain.

“We’ve agreed to begin discussions again with China — while that’s a constructive step, it doesn’t remove the uncertainty,” Powell said, adding that a strong June jobs report did not change the outlook on interest rates. “The uncertainties around global growth and trade continue to weigh on the outlook,” he said. “In addition, inflation continues to be muted.”

Investors fully expect a cut of a quarter-percentage point at the Fed’s July 30 to July 31 meeting, and bets that the move could be as big as half a percentage point climbed Wednesday.

Powell did not explicitly say a rate cut is coming, but he pointed to mounting economic concerns and made no effort to walk back market pricing for expectations of a cut this month. He also did not rule out the possibility of a larger cut when given the chance to do so.

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The Fed’s pre-meeting blackout period starts July 20, so officials have just this week and next to manage expectations.

The 17-member Fed policymaking committee was split in June over whether the central bank should cut rates this year, with eight officials projecting a cut before the end of the year and nine pointing to no change or a rate increase. Minutes from the June meeting that were released Wednesday reinforced Powell’s message. Many Fed officials thought a rate cut could be warranted “in the near term” if uncertainty persisted, the notes show.

That sentiment seems to be holding up.

James Bullard, president of the Federal Reserve Bank of St. Louis and the lone dissenter in favor of lower rates in June, said on a call with reporters Wednesday that he would argue for a rate cut of a quarter-percentage point at the next meeting. He has penciled in half a percentage point in cuts before the end of the year. “That would depend on how the economy developed, and especially on how inflation and inflation expectations developed,” he said.

If the Fed lowers borrowing costs, the move may please the president. Trump has been jawboning the Fed to cut rates for months, aiming a barrage of tweets and comments at the central bank.

Powell reiterated that he was not acting at the behest of political pressure, which has included reports that the White House has looked into demoting him from chair to a Fed governor. Asked by a lawmaker what he would do if Trump tried to fire him, Powell responded that he would not step down. “Of course I would not do that,” Powell said. “My answer would be no.”

He added that “the law clearly gives me a four-year term, and I fully intend to serve it.”

Political pressures aside, tepid price gains are making a rate cut more likely. Inflation climbed just 1.5% in the year through May, well below the Fed’s 2% target. Weak prices are a problem because they increase the risk of economy-harming deflation, and leave policymakers less room to cut rates in a downturn.

Fed officials are also increasingly alert to slow wage growth, and Powell made what might be his strongest comments yet that the labor market was not behaving the way most economists would have expected. Unemployment is at a 50-year low, but wages have yet to rise in the way they typically should if there are more jobs than available workers.

“We don’t have any basis, or any evidence, for calling this a hot labor market,” Powell said.

“To call something hot, you need to see some heat, and while we hear lots of reports of companies having a hard time finding qualified labor, nonetheless, we don’t really see wages really responding,” he said. “So I don’t really see that as a current issue.”

Moving rates lower — even just slightly — could signal that the Fed is ready to defend its 2% inflation goal, and show that it is prepared to act to offset fallout from the trade war and slowing foreign growth. When discussing reasons to potentially cut rates at their June meeting, several Fed officials said they saw less upward pressure on inflation from tight labor markets than they had expected. A few were concerned that inflation expectations had already sunk too low, based on the meeting minutes.

Powell will get a second chance to convey expectations about a potential rate cut Thursday, when he testifies before the Senate Banking Committee.

This article originally appeared in The New York Times.

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