President Donald Trump has renewed his attacks on Federal Reserve Chairman Jerome Powell, blaming him for failing to stimulate the economy fast enough (ANDREW CABALLERO-REYNOLDS)

Zurich (AFP) – The US central bank is ready to step in to preserve the American economy’s expansion amid mounting risks, Federal Reserve Chairman Jerome Powell said Friday.

While the Fed is not expecting a recession, trade frictions — as well as slower global growth and persistently low inflation — are among the “significant risks” that policymakers are watching, Powell said during a conversation at the University of Zurich.

The remarks should strengthen widespread expectations that the central bank will cut interest rates later this month.

As it becomes increasingly apparent that the US economy has slowed in 2019, President Donald Trump has publicly berated Powell and the Fed for failing to loosen monetary policy fast enough — something Powell said Friday policymakers tune out.

“We see the most likely case for the US and for the world too as continued moderate growth,” Powell said. “We’re not forecasting or expecting a recession.”

He added that the Fed will “continue to act as appropriate to sustain this expansion,” while “trade policy uncertainty will be weighing on business investment decisions.” 

The economic landscape has shifted this year, as business investment weakened noticeably, manufacturing has fallen into decline and job creation has slowed.

Powell noted, however, that unemployment had remained near historic lows for about 18 months while wages were rising, fueling consumer spending.

“The consumer has been strong. The service sector has been strong,” he said. “Our labor market is in quite a strong position.”

Trump on Friday renewed his attacks on Powell, whom the president promoted to Fed chairman last year, denouncing both 2018’s interest rate increases and the pace of cutting so far this year.

“Where did I find this guy Jerome?” Trump asked on Twitter.

But in Zurich Powell reiterated that he and his Fed colleagues tune out politics when they set monetary policy.

Congress created the Fed to operate as an independent government agency.

Powell also rejected the suggestion that the Fed could seek to oppose Trump’s reelection by temporarily undermining the economy.

William Dudley, a top former Fed official, caused a considerable stir last month by publicly suggesting the Fed should do just that.

“Absolutely not,” Powell said. “Political factors play absolutely no role in our discussions.”

He also reiterated the Fed’s cautious position on Facebook’s proposal to introduce a new digital currency, saying the approval process would not be a “sprint.”

Given Facebook’s global penetration, “it could be systematically important right away,” he said.

“And because of that it would have to be held to the highest regulatory expectations.”

Disclaimer: Validity of the above story is for 7 Days from original date of publishing. Source: AFP.