European shares grind higher ahead of Powell speech

Fed will remain flexible, rates not on preset course: minutes

ASX to fall ahead of big speeches by RBA and Federal Reserve bosses

His tweet came shortly after Powell gave a speech at the Jackson Hole Economic Symposium in Wyoming, during which he promised policymakers will "act as appropriate" to sustain the record economic expansion.

President Donald Trump has lashed out at the Federal Reserve chairman, after Jay Powell refused to cut interest rates to Trump's liking, a move that would have given the president ammunition to escalate his trade war with China. "Our great companies are hereby ordered to immediately start looking for an alternative to China, including bringing your companies HOME and making your products in the USA" It is unclear, however, what legal mechanism Trump has at his disposal to force these companies home.

Part of the reason the yield curve inverted is because the U.S. economy remains so much stronger than much of Europe: investors would rather have "safe" U.S. Treasuries, even with their dropping yields, than say, German bonds with a negative yield.

Despite the risks to the outlook, and the fact that Fed officials expect United States growth to slow in the second half of the year, they "continued to view a sustained expansion of economic activity, strong labor market conditions, and inflation near the committee´s symmetric two percent objective as the most likely outcomes".

Soon after, Trump went on to attack China, which had announced tariffs of 5% to 10% on $75 billion of US -made goods, to take effect on September 1 and December 15 - the same dates that Trump's new tariffs on $300 billion of Chinese products are set to go into effect.

Powell said that there is an "unlikely" chance that the Fed faces too-high inflation, but said the Fed has the tools to address it if it arises. "Members who voted for the policy action sought to better position the overall stance of policy to help counter the effects on the outlook of weak global growth and trade policy uncertainty, insure against any further downside risks from those sources, and promote a faster return of inflation" to the 2% target, according to minutes of the July 30-31 Federal Open Market Committee meeting, released Wednesday in Washington.

The Fed chief is caught between discord within the US central bank over appropriate monetary policy and mounting outside pressure for more interest rate cuts.

Policymakers were already divided over whether to head off economic fears with significant further rate cuts or to stand pat because people are still finding jobs, taking home fatter paychecks and spending money. The White House has called on the independent central bank to lower interest rates by up to a full percentage point, an adjustment that would typically be deployed only in a severe downturn.

While U.S. data are mixed, economists remain positive on growth, with estimates showing the expansion continuing into 2021, according to forecasts compiled by Bloomberg.

However, the minutes showed the central bankers are not unified, with several opposed to cutting rates while a couple favored a bigger cut. "Setting trade policy is the business of Congress and the Administration, not that of the Fed", he said on Friday.

The pan-European STOXX 600 index .STOXX turned sharply lower after Trump's tweets and last fell 0.68%, while MSCI's gauge of stocks across the globe .MIWD00000PUS dropped 0.92%.

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