The Fed is expected to cut interest rates Wednesday, after second quarter GDP shows inflation is still sluggish and trade wars are impacting business.
GDP grew by 2.1% in the second quarter, reinforcing expectations the Fed will cut interest rates, even though the report was better-than-expected, thanks to a strengthening consumer.
Federal Reserve Chairman Jerome Powell testifies during a House Financial Services Committee hearing on "Monetary Policy and the State of the Economy" in Washington, July 10, 2019.The Fed is expected to move ahead to cut interest rates by a quarter point Wednesday aftershows inflation is still sluggish and trade wars are impacting business and trade.
Core PCE inflation, followed closely by the Fed, rose 1.8%, was still below the Fed's 2% target. However, inflation was stronger than the 1.1% in the first quarter, which was revised a tenth of a percentage point lower. "Business spending was hit," said Hill, noting that government spending helped support it. "The forward looking risks are still there. There are still risks around the trade war. There's risks around Brexit. There are risks around a deteriorating global economy," said Hill.
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