The S&P 500 index pushed above the 3,000 mark for the first time and stocks hit record-highs after Fed Chair Jerome (Jay) Powell signaled an interest rate cut is likely in July during testimony before the House Financial Services Committee. The market has anticipated a rate cut this month and Powell’s comments today did nothing to temper such ideas.
Since June, Powell says that “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. Inflation pressures remain muted.”
Powell also stressed the importance of the Federal Reserve maintaining its independence from political pressure. This comes against the backdrop of harsh criticism from President Donald Trump about the Fed’s decisions not to lower interest rates at recent meetings.
Currently, the benchmark interest rate stands at 2.35%, the highest level in more than a decade, but still low by historical standards. Most expect at least a 25-basis point cut at the Fed’s July 31 meeting.
The minutes of the Federal Open Market Committee’s June 19 meeting that will be released this afternoon will also provide some insight as to where Fed officials stand on rates.