Fed chief to testify in Congress as strong jobs growth dampens rate cut expectations

US Federal Reserve Chairman Jerome Powell will deliver his biannual testimony on monetary policy to the House of Representatives today.

jerome powell congress

Photo: Al Drago/Bloomberg/Getty

US Federal Reserve Chairman Jerome Powell will deliver his biannual testimony on monetary policy to the House of Representatives today.

Mr Powell’s testimony comes after employment data reported on Friday that some 224,000 jobs were added to the US economy in June—well above the anticipated 160,000. The robust job growth suggests that a global slowdown and Washington’s trade war with China are not hurting the US economy as much as expected.

Prior to the employment report, the Fed was expected to slash the interest rate target—currently at 2.25-2.5%—by as much as 50 points to counteract a slowing economy. Analysts are now divided on whether rates will be cut by 25 points or held steady.

The Fed raised interest rates four times last year to offset inflationary pressures and allow itself the ability to cut rates if the economy slowed considerably. Having emphasised patience in the past, America’s central bankers may choose to delay a rate cut until September on the back of June’s unexpected job growth.

With President Donald Trump placing heavy pressure on Mr Powell to cut rates, signalling an intention to hold rates steady today would also be seen as a reaffirmation of Fed’s independence.

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