Fed will continue to act ‘as appropriate’ to sustain U.S. growth

FILE PHOTO: Federal Reserve Chair Jerome Powell holds a news conference following the Federal Reserve’s two-day Federal Open Market Committee Meeting in Washington, U.S., July 31, 2019. REUTERS/Sarah Silbiger

ZURICH (Reuters) – The U.S. Federal Reserve will continue to act “as appropriate” to sustain the economic expansion in the world’s biggest economy, Fed Chair Jerome Powell said Friday in Zurich, sticking to a phrase that financial markets have taken to signal further rate reductions, but declining to be more specific.

“Our obligation is to use our tools to support the economy, and that’s what we’ll continue to do,” Powell said at the University of Zurich. Still, he said, “We are clearly at a time where there is a range of views” among Fed policymakers meeting Sept. 17-18 to decide on rates.

Powell’s careful wording reflects a split within the U.S. central bank about how best to respond to an economy where the consumer is strong but risks are increasing due to rising trade tensions between Beijing and Washington, geopolitical risks including Britain’s possibly messy exit from the European Union, and a broad global slowdown.

In what are likely to be the last public remarks from a U.S. central banker before the Fed’s September meeting, Powell said policymakers will be closely watching geopolitical risks, financial conditions, and other incoming economic data as they weigh what to do.

“We are going to act as appropriate to sustain the expansion,” he said.

The Fed cut rates by a quarter of a percentage point in July, and investors expect two more rate cuts this year, including one later this month.

Writing by Ann Saphir; Editing by Chizu Nomiyama and Andrea Ricci

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