Fed President Jerome Powell noted that the US central bank has the ability to weaken monetary policy, but said that the relationship between inflation and unemployment has been violated.
"The relationship between unemployment and inflation has become weaker about 20 years ago," Powell said on Thursday at the Senate Banking Committee and commented, "He is weaker, weaker and weaker."
Load of US President Donald Trump to reduce borrowing costs lowerAt a central bank meeting at the end of this month, the two Fed presidents strengthened the grounds for lower interest rates to overcome the weakness of the global recession, driven by a decline in industry, industry and business confidence due to trade tensions.
In his second speech to the Powell Congress on Monday, he said that the US economy is in a very good place and said that the central bank wants to use its tools to save the economy.
Ward McCarthy, Chief Financial Officer at Jefferies LLC, said: "Powell has sent a fairly clear signal that he intends to lower interest rates."
Powell told senators that the so-called neutral interest-neutral, economic growth boom is less than the previous calculations, which means that monetary policy is too restrictive.
"We learn that interest, that is, a neutral interest rate lower than we thought, and I think we found that the neutral level of unemployment is lower than we think," Powell said. and therefore the monetary policy is not as expansive as we think. "
In fact, Federal Reserve officials lowered projections for long-term interest rates from 2.8% in March to 2.5% in June.
According to the pricing of interest rates, investors are likely to expect a lower interest rate on the fourth point at the Fed meeting on July 30-31, albeit lowering the probability of stronger than expected inflation data in the United States on Thursday.