Fed Chair Jerome Powell says the economy isn't looking so hot, sparking stock market rally

Jerome Powell.
(Image credit: MANDEL NGAN/AFP/Getty Images)

Federal Reserve Chair Jerome Powell on Wednesday will testify before Congress and suggest that interest rates could be cut at the end of July, saying that business investment has "slowed notably," The Washington Post reports.

In prepared testimony, Powell says that although the economy is doing "reasonably well," since last month, "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."

Powell additionally observed that "economic momentum appears to have slowed in some major foreign economies, and that weakness could affect the U.S. economy" and that "a number of government policy issues have yet to be resolved, including trade developments, the federal debt ceiling and Brexit," The Wall Street Journal reports. The Federal Reserve will "act as appropriate," he will tell Congress, CNBC reports.

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The Fed chair appeared open to cutting interest rates as President Trump has urged him to do, Bloomberg writes, with CBS News observing that he "hints strongly" at a cut with his comments. Trump said last week that "if we had a Fed that would lower interest rates, we would be like a rocket ship." The president also said on Sunday that the Federal Reserve would cut interest rates if it "knew what it was doing."

As news of Powell's testimony broke, the Dow Jones Industrial Average jumped 195 points, CNBC reports.

Powell, who Trump has repeatedly said he has the right to fire and has reportedly considered demoting, will also emphasize the Fed's "important degree of independence," Politico reports. "We appreciate that our independence brings with it an obligation for transparency so that you and the public can hold us accountable," he will say.

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