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JACKSON HOLE, Wyo. (Reuters) - The Federal Reserve will “act as appropriate” to keep the U.S. economy healthy, Fed Chair Jerome Powell said on Friday, remarks that did not say how fast it might cut interest rates, drawing fire from President Donald Trump.
The Fed chair, under pressure from Trump and markets to cut rates, characterized the U.S. economy as in a “favorable place” but facing “significant” risks, especially what Fed officials have described as the harmful effects of the White House’s trade war with China.
There are “no recent precedents to guide any policy response to the current situation,” Powell said in a closely watched speech at an annual Fed retreat in Jackson Hole, a valley set against the Grand Teton mountains. Powell added that monetary policy “cannot provide a settled rulebook for international trade.”
Powell did note that rate cuts in the 1990s helped keep an expansion intact. But the overall tone of his statement, a reflection of divisions within the Fed itself over what to do next, may disappoint investors expecting the central bank to cut rates at its September meeting and possibly several more times this year. The central bank reduced its benchmark rate by a quarter percentage point in July for the first time in more than a decade in what Powell referred to as a mid-cycle adjustment.
Trump, who has demanded rate cuts, condemned the Fed for doing nothing “as usual” and said “our great American companies are hereby ordered to immediately start looking for an alternative to China.”
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