USA core CPI posts biggest gain in almost 1-1/2 years

Federal Reserve chairman signals cut in US interest rates

Fed chairman hints at first interest rate cut in over a decade

Powell's statement Wednesday boosted the US stock market as it confirmed for many investors their expectations that the Fed will cut short-term rates for the first time in a decade at its next meeting in late July. The probability of a half-percentage-point cut ticked higher on Wednesday, according to CME Group, but most still expected that policymakers would lower the benchmark interest rate by 25 basis points. His concerns, Powell shared, rest in his "uncertainties" with Trump Administration's trade negotiations pointing to a subsequent a lull in business investment, saying, "Crosscurrents have reemerged".

Fed Chairman Jerome Powell told lawmakers in testimony Wednesday that the economic outlook hasn't improved since June's meeting.

Fed Chair Powell said that "uncertainties since [the] June FOMC continue to dim [the economic] outlook", a not-so-subtle hint that the US-China trade war is hurting the economy. He also said low inflation may prove even more persistent than now expected. "To me, it all depends on where you look in the economy".

President Trump has been highly critical of the Federal Reserve in recent weeks for raising rates too fast, tweeting that it "doesn't know what it is doing". "So they figure keep trying this until something happens".

United States stock index futures gained early on Wednesday, turning positive after Powell's remarks were released, while the USA dollar fell against a basket of other currencies.

"Core CPI inflation is still only 2.1%, up a tenth from May, but the NFIB signals a rising trend to 2.7% by next spring".

U.S. consumer prices rose a tad more quickly than expected in June amid sharp increases in the prices of used cars and trucks, and apparel.

Powell presented his remarks and then took questions from members of the US House of Representatives Committee on Financial Services.

Powell will testify again on Thursday before the Senate Banking Committee.

The Fed, which hiked rates four times past year, has kept its current benchmark overnight interest rate in a range of between 2.25% and 2.50% since December.

Trump has long insisted lower rates will help the USA economy grow even he prepares to try and win re-election in 2020. Many investors have put the odds of a rate cut this month at 100%. That can make it harder for the Fed to push inflation, which fell to 1.5% last month, back to its target.

"Higher tariffs could yet put some further upward pressure on core goods prices over the coming months but, with growth in unit labor costs slowing, we still think core CPI inflation will remain muted", Hunter said.

Mr Trump discussed firing Mr Powell in late 2018 and asked White House lawyers earlier this year to explore options for removing him as Fed chairman, Bloomberg has reported.

There are growing fears that Donald Trump is influencing the Federal Reserve, a key USA economic institution whose independence is vital to the future of the world's largest economy.

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