Federal Reserve Chairman Jerome Powell will tell Congress Wednesday that trade tensions and slowing global growth are continuing to drag on the U.S. economy, suggesting an interest rate cut is still on the table for the central bank's rate-setting meeting later this month.
In prepared testimony before the House Financial Services Committee, Powell says many Fed officials in June saw the case for lower rates as strengthening.
"Since then, based on incoming data and other developments, it appears that uncertainties around trade tensions and concerns about the strength of the global economy continue to weigh on the U.S. economic outlook," he will say. "Inflation pressures remain muted."
He cites multiple government policy issues that need to be resolved, such as raising the federal debt ceiling and Britain's departure from the European Union. "And there is a risk that weak inflation will be even more persistent than we currently anticipate," he will say.
But overall, he says the economy performed "reasonably well" during the first half of the year and that the labor market "remains healthy," adding that employers "are increasingly willing to hire workers with fewer skills and train them." Still, the Fed expects growth to be moderate in the second quarter.
As a subtle nod to President Donald Trump's onslaughts against Powell for raising rates last year and not cutting them so far this year, the chairman will cite the Fed's political independence in the fourth sentence of his testimony.
"Congress has given us an important degree of independence so that we can effectively pursue our statutory goals based on objective analysis and data," he will say.
"We appreciate that our independence brings with it an obligation for transparency so that you and the public can hold us accountable."Powell will testify again Thursday before the Senate Banking Committee.
Article originally published on POLITICO Magazine