Powell on Tuesday reiterated that the central bank still sees USA growth prospects as strong, with unemployment low and inflation near the Fed's 2% annual target, but that he and his colleagues are wrestling with whether uncertainty over trade and inflation support a case for lowering rates. Policy makers "blew it" on June 19 when they kept the benchmark overnight rate unchanged at just under 2.5 per cent, Trump tweeted on Monday. Now they stick, like a stubborn child, when we need rates cuts, & easing, to make up for what other countries are doing against us.
The official said that Mr Trump is "comfortable with any outcome" arising from his meeting with Mr Xi.
Also arguing for a cut at last week's meeting was Minneapolis Fed President Neel Kashkari, who doesn't have a vote on interest rates this year.
"I'm not happy with his actions", said Trump referring to Powell.
"I think the law is clear that I have a four-year term and I meant to serve it, " Powell said last Wednesday at a press conference.
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Powell has sought to distance himself from Trump's criticism, saying the Fed doesn't consider politics in its policy decisions and he has no plans to leave before his term expires in 2022.
Fed officials are now split between whether to continue indefinitely holding rates level for the remainder of the year or to make at least one, if not two, rate cuts in the second half amid intensifying trade tensions.
But he also warned that monetary policy should not overreact to any individual data point or short-term swing in sentiment. It's an outcome that would become even more likely if trade talks between the United States and China deteriorate, or the situation in the Middle East escalates, as that would likely hamper global economic growth, making stimulus that much more necessary. But Powell said he and his colleagues are "grappling" with whether current risks to the economy warrant a rate cut.
But risks to that outlook have grown, he added, as recent progress on resolving trade disputes had deteriorated, producing greater uncertainty. "After last week's meeting, hopes for a rate cut took off and that might not be in the picture next month". This will be their first face-to-face meeting after trade talks failed in May that led to increase US tariffs on imports of Chinese goods.
"The limited available evidence we have suggests that investment by businesses has slowed from the pace earlier in the year", Powell said.
Powell did not commit to a rate cut but says the central bank will closely monitor incoming data and be prepared to "act as appropriate to sustain the expansion".