Federal Reserve Chairman Jerome Powell is open to cutting interest rates if necessary, due to trade disputes between the U.S. and others.
Powell opened a Chicago Fed conference stating “we do not know how or when these issues will be resolved,” adding “we are closely monitoring the implications,” according to Bloomberg News.
Powell says the Federal Reserve will “act as appropriate” to sustain the current economic expansion in the United States.
Earlier in the week, St. Louis Fed President James Bullard called for a rate cut, citing the threat to economic growth posed by trade tensions. Investors appear to expect up to a half percentage point cut in the rate.
Meanwhile, President Trump has increased trade tensions, escalating the trade war with China after nearly reaching an agreement, and threatening new tariffs against Mexico.
The already historically low-interest rates prompt some fear that the Federal Reserve Bank would have a limited response, should an economic recession occur, as rates generally can’t be cut below zero.
