Powell discusses monetary policy strategy, tools and communication practices
- Fed 'closely monitoring' impact of trade developments
- Economy growing, unemployment low, inflation stable
- Fed does take seriously that persistent low inflation unhinges inflation expectations
- We do not know how or when trade issues will be resolved
- Much higher likelihood rates will fall to effective lower bound in a downturn
- Crisis-era tools worked and are likely to be needed again
- 'Dot plot' has distracted attention from how Fed will react to unexpected events
Powell opened the door here to a rate cut but only if the trade war continues or escalates. He's basically telling the market that cuts will come if there is more trouble. The market might have wanted something a bit more explicit but I think as this is digested the US dollar will soften.
There is no scheduled Q&A.
