Jerome Powell sends the signal markets have been waiting for: “Headwinds are picking up. The Fed will act appropriately to support the expansion”. These are the words of the number one of the Federal Reserve in front of Congress, before which he will be in hearing today and tomorrow.
The text was brought forward to the media before the intervention, triggering the immediate reaction of the Stock Exchanges: after a morning of sales, European lists improve (Piazza Affari is the best at +1,1%). Wall Street runs at the opening: +0,67% for the Dow Jones, +0,71% above 3.000 points for the S&P 500, +1% for the Nasdaq.
According to analysts, Powell's statements could indicate the will of the US central bank to cut interest rates already during the meeting scheduled for the end of July despite the very positive data on work still raise some doubts.
The Fed Governor explained that the American economy "weighs many uncertainties", first of all the trade war between the US and China, but also Brexit and the slowdown in global growth. Added to this is that “competitors are getting stronger”. In contrast, however, there are US data: the American labor market "remains healthy" with an average of 172 jobs created each month from January to June and the benefits of this market "have been more widespread in recent years". Not only that, the growth of the economy "remains solid" and inflation returns to grow at an annual rate of 2%.
During his hearing he also sent a very clear message to President Donald Trumpbut without ever naming him. At the beginning of the text of his speech to the US Congress, the number one of the Fed said: "Congress has given us an important degree of independence so that we can effectively pursue our objectives set by statute on the basis of and objective data. We appreciate that our independence carries with it a duty of transparency so that we are held accountable to you and the public."
An indirect response to Trump who in recent weeks had harshly criticized the US central bank for not yet cutting rates as he would like from last year.
