Federal Reserve Chairman Jerome Powell hinted at a rate cut later this month as he told Congress on Wednesday that trade tensions and concerns about global growth have slowed U.S. business investments.

In his semi-annual monetary report to Congress, Powell said that based on incoming data and other developments, “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.”

Analysts predict that these remarks are expected to lead up to at least one cut in interest rates in July, and that additional cuts could be possible.

“At the time of our May meeting, we were mindful of the ongoing crosscurrents from global growth and trade, but there was tentative evidence that these crosscurrents were moderating,” Powell said in a prepared statement.

“The latest data from China and Europe were encouraging, and there were reports of progress in trade negotiations with China,” he continued. “Our continued patient stance seemed appropriate, and the committee saw no strong case for adjusting our policy rate.”

Since the May meeting, Powell said that “these crosscurrents have reemerged, creating greater uncertainty.”

“Apparent progress on trade turned to greater uncertainty, and our contacts in business and agriculture report heightened concerns over trade developments,” he added. “Growth indicators from around the world have disappointed on net, raising concerns that weakness in the global economy will continue to affect the U.S. economy. These concerns may have contributed to the drop in business confidence in some recent surveys.”

Following the release of Powell’s comments, stock futures turned positive with the Dow Jones Industrial Average gaining more than 100 points

The Dow advanced 111.72 points, or .0.4%, to 26,895.21, while the S&P 500 rose 0.5% to 2993.75, and the NASDAQ composite gained 0.7% to 8199.59.

“The economy performed reasonably well over the first half of 2019 and the current expansion is now in its 11th year,” the Fed chief explained in his testimony.

Powell said that “after running close to 2% objective over much of last year, overall consumer price inflation, measured by the 12-month change in the price index for personal consumption expenditures (PEC), declined earlier this year and stood at 1.5% in May.”

“The 12-month change in core PCE inflation, which excludes food and energy prices and tends to be a better indicator of future inflation, has also come down this year and was 1.6% in May,” he said in his testimony.

Powell also reported that the labor market remains healthy. Job gains averaged 172,000 per month from January through June. This is lower than the average 223,000 a month last year, but above the pace needed to provide jobs for new workers entering the labor force.

“Consequently, the unemployment rate moved down from 3.9% in December to 3.7% in June, close to its lowest level in 50 years.”

Photo: BRENDAN SMIALOWSKI/AFP/Getty Images

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