US Federal Reserve Chairman Jerome Powell said on Tuesday the central bank will "act as appropriate" in response to risks posed by a trade war, remarks that may open the door to the possibility of a rate cut."We do not know how or when these issues will be resolved," Powell said.
"We are closely monitoring the implications of these developments for the US economic outlook and, as always, we will act as appropriate to sustain the expansion, with a strong labor market and inflation near our symmetric 2 per cent objective."The brief statement opened a two-day session at the Chicago Federal Reserve intended to shore up the central bank's policies to prepare for the likely possibility that policymakers will eventually confront another recession and push rates back to zero, eliminating any room to cut further and thus exhausting a traditional policy tool.The more immediate issue is how the Fed should respond to a trade war expanding on multiple fronts, after US President Donald Trump slapped new 25 per cent tariffs on $200 billion of Chinese imports and threatened new import taxes on Mexico unless immigration slows.
The question of how to respond divides policymakers and markets.696538896945917768732774