Trade Clouds
He did though say that the Fed was struggling over how to assess -- and respond to -- the impact of Trump’s trade policies on the economy.
“There isn’t a lot of experience in responding to global trade tensions,” he said. It’s “something that we haven’t faced before and that we’re learning by doing.”
While the direct effect of tariffs are not large, what’s key is the impact that the policies have on business confidence and financial markets, he said.
And they can change quickly in response to the latest Trump tweet.
In arguing that Wednesday’s small rate cut would aid the economy, Powell portrayed it as a continuation of a shift in the Fed’s posture, from projecting rate hikes in December to easing policy now.
“He was very much making the point that the Fed has changed its policy stance considerably,” said Wrightson ICAP LLC chief economist Lou Crandall.
The about-face has helped buttress financial markets and corporate confidence as it played out in recent months.
Muddled Message
Wednesday though was a different story, as investors and analysts grumbled over what they perceived as a muddled message from Powell, reviving past criticism of him as a communicator.