The U.S. Federal Reserve over the course of its 105-year history has changed mon...
WASHINGTON - The U.S. Federal Reserve over the course of its 105-year history has changed monetary policy in reaction to property crashes, war, financial bubbles and policymakers’ gut instincts about where the economy was heading.
The U.S. economy did not change much in the days that followed. But Trump’s statements spooked financial markets so decisively, and the threats to the global economy became so palpable, that an interest rate cut of at least 25 basis points has been baked in for the Fed’s July 30-31 policy meeting, a message Fed Chairman Jerome Powell is expected to reinforce when he testifies before a congressional committee on Wednesday.
Powell is scheduled to appear before the U.S. House of Representatives Financial Services Committee at 10 a.m. EDT as part of his semi-annual monetary policy testimony to Congress. Earlier rounds of U.S. tariffs on trading partners including China had been dismissed as of little macroeconomic importance, with the Fed in early May still anticipating its policy rate would remain unchanged in a range of 2.25% to 2.50% for the rest of the year.
As Trump tied the threatened tariffs, which would have hit one of the world’s most integrated supply chains, to non-economic demands about immigration, investors over two days knocked about a quarter of a percentage point from the federal funds rate expected at the end of 2019.
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