Fed’s Powell says central bank will support expansion, but stops short of signaling more rate cuts

Federal Reserve Chairman Jerome Powell said Friday the central bank is prepared to help sustain America’s economic expansion if a global slowdown hurts the U.S. economy.

But Mr. Powell, under almost daily pressure from President Trump to cut interest rates further, said in a closely watched speech that there are limits to monetary policy spurring the economy.

And he stopped short of giving a clear signal that further interest rate cuts are imminent at the Fed’s next meeting in mid-September.

“Our challenge now is to do what monetary policy can do to sustain the expansion so that the benefits of the strong jobs market extend to more of those still left behind, and so that inflation is centered firmly around 2 percent,” Mr. Powell said at the Kansas City Fed’s annual symposium in Jackson Hole, Wyoming.

The president blasted Mr. Powell for doing nothing “as usual.”

“It is incredible that they can ’speak’ without knowing or asking what I am doing, which will be announced shortly,” Mr. Trump tweeted. “We have a very strong dollar and a very weak Fed. I will work ’brilliantly’ with both, and the U.S. will do great.

He added, “My only question is, who is our bigger enemy, Jay Powell or Chairman Xi?” It was a reference to Chinese President Xi Jinping, whose government announced new tariffs on the U.S. Friday.

The president has been urging the Fed to cut rates by one percentage point or more as soon as possible to sustain U.S. growth. Mr. Trump has criticized Mr. Powell for raising interest rates four times last year, saying the moves prevented the economy from growing at a stronger pace.

Mr. Powell also said there is no “rulebook” for the current U.S.-China trade war, saying that “fitting trade policy uncertainty into this framework is a new challenge.”

Shortly before he spoke, China announced retaliatory tariffs on $75 billion worth of U.S. goods to take effect in September and December.

“While monetary policy is a powerful tool that works to support consumer spending, business investment and public confidence, it cannot provide a settled rulebook for international trade,” Mr. Powell said.

Instead, Mr. Powell said the Fed should “look through what may be passing events, focus on how trade developments are affecting the outlook, and adjust policy to promote our objectives.”