On Friday, August 23, Federal Reserve Chairman, Jerome Powell, addressed the central bank's annual monetary policy conference on the Fed's stance on the United State's trade deficit. As it sits today, the trade deficit in the U.S. is over $850 billion, the highest in U.S. history. Jerome Powell spoke about how the Federal Reserve's focus is on inflation and employment, as it always has been. Powell stated that "Setting trade policy is the business of Congress and the administration, not that of the Fed,".
Powell also hinted at lower interest rates in the near future, the first interest rate cuts since 2008. Powell cited incremental rate cuts that helped the U.S. prolong economic expansion in the United States in the 1990s. President Trump feels like he does not have the support of the Federal Reserve and referred to the Fed as "a very weak Fed" in a tweet after Chairman Powell gave his speech.
Personally, I believe that Jerome Powell's stance on the trade war is accurate. The Federal Reserve, historically, has not been involved in trade, so why start now?
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