Federal Reserve System

Jerome Powell: Trade wars weighing on economy, no word on cuts

Photo: Andrew Caballero-Reynolds/AFP/Getty Images

Fed Chair Jay Powell said in a closely watched speech Friday that the central bank is ready to support economic growth but "stopped short of signaling the start of a more aggressive easing campaign," the Wall Street Journal reports.

Why it matters: Worries of an economic downturn have increased in recent weeks, and Powell warned that "trade policy uncertainty" is a driving factor for the market's fears. President Trump has stepped up his calls for the Fed to do more to stimulate the economy — going so far as to tweet just minutes before Powell's speech — even though interest rates are already near historic lows.

Trump backtracks on payroll tax cut

Trump
Photo: Mandel Ngan/AFP/Getty Images

President Trump abandoned his stance on considering a payroll tax cut Wednesday, just 1 day after telling reporters that he had been "thinking about" whether to pursue the move.

The big picture: Discussions over cutting the payroll tax, which currently sits at 6.2% and is used to fund Social Security and Medicare, are part of a broader White House effort to stem fears of a coming recession — though Trump insisted to reporters that "whether or not we do it now, it's not being done because of recession." Sources tell Axios' Jonathan Swan that Trump is "running out of tools" to juice the economy, with an economic slowdown looking increasingly likely ahead of the 2020 election.