Stocks Rally As Fed Chairman Speaks The Federal Reserve chairman is testifying before Congress this week about challenges the economy faces. Stocks rallied in anticipation the central bank will lower interest rates later this month.
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Fed Chairman Powell Hints At Interest Rate Cut; Stocks Rally

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Fed Chairman Powell Hints At Interest Rate Cut; Stocks Rally

Fed Chairman Powell Hints At Interest Rate Cut; Stocks Rally

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  • <iframe src="https://www.npr.org/player/embed/740219700/740481040" width="100%" height="290" frameborder="0" scrolling="no" title="NPR embedded audio player">
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ARI SHAPIRO, HOST:

Federal Reserve Chairman Jerome Powell is in the hot seat this summer. He's trying to sort out conflicting economic signals while also dodging insults from President Trump. Today, Powell went before a divided congressional committee to offer an update on the economy just weeks ahead of a key decision on interest rates. NPR's Scott Horsley reports.

SCOTT HORSLEY, BYLINE: Powell told lawmakers the U.S. economy is still growing, though not as fast as it was earlier this year. The Fed chairman left little doubt he and his colleagues are prepared to cut interest rates later this month to prolong the economic expansion now entering its 11th year.

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JEROME POWELL: We see the economy as being in a good place, and we're committed to using our tools to keep it there.

HORSLEY: Powell says many Americans on the lower rungs of the income ladder are only now beginning to enjoy the benefits of the recovery, so he doesn't want it to end prematurely. Manufacturing has slowed around the world, and tariff battles are disrupting trade. While, so far, consumer spending in the U.S. has held up well, Powell says business spending is taking a hit.

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POWELL: Uncertainty can cause businesses to hold back on investment and hiring. In fact, we've been hearing that in our discussions with businesses around the country.

HORSLEY: The Fed's been signaling for weeks now that it might prop up the economy by cutting interest rates, making it easier for consumers and businesses to borrow money. But when Powell and his colleagues last met in June, they left rates unchanged. President Trump has been browbeating Powell, saying the economy would be growing faster if only the central bank had acted more quickly.

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PRESIDENT DONALD TRUMP: If we had a Fed that would lower interest rates, we'd be like a rocket ship. But we're paying a lot of interest and it's unnecessary, but we don't have a Fed that knows what they're doing, so it's one of those little things.

HORSLEY: Today, Democrats on the House Financial Services Committee accused the president of meddling with what's supposed to be an independent Federal Reserve. Chairwoman Maxine Waters of California sought reassurance from Powell that he wouldn't bend to political pressure.

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MAXINE WATERS: If you got a call from the president today or tomorrow and he said, I'm firing you, pack up, it's time to go, what would you do?

POWELL: Well, of course, I would not do that.

WATERS: I can't hear you.

(LAUGHTER)

POWELL: My answer would be no.

HORSLEY: Powell reiterated his intention to serve out his four-year term. The ranking Republican on the committee, Patrick McHenry of North Carolina, downplayed the president's kibitzing, suggesting it does not amount to interference with the Fed. McHenry also touted GOP tax cuts and deregulation as key ingredients in the long-running expansion.

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PATRICK MCHENRY: The economy over the last 2 1/2 years has witnessed remarkable growth, and unemployment has reached lows that many believe were impossible.

HORSLEY: Powell agreed at 3.7%, unemployment is lower than many forecasters thought would be sustainable. But with wages rising only modestly about 3% per year, Powell sees little sign of an economy overheating.

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POWELL: 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 see wages really responding, so I don't really see that as a current issue.

HORSLEY: Lawmakers quizzed Powell about a proposal to raise the minimum wage to $15 an hour nationwide, but the Fed chairman didn't take the bait. Congressional forecasters said this week there'd be both cost and benefits to the plan with at least 17 million people getting raises but more than a million possibly losing jobs. Ultimately, Powell said, that's a judgment for Congress to make. Scott Horsley, NPR News, Washington.

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