Washington (AFP)

The US Central Bank (Fed) opened the door Wednesday to a possible decline in interest rates to support the economy in the face of continuing trade tensions and slowing global growth.

"The uncertainties surrounding the outlook have clearly increased since our last meeting," Jerome Powell summed up, citing the trade war at a press conference after a two-day meeting of the Monetary Committee.

There is therefore more reason for "a little more accommodating" monetary policy, he said.

Observing that growth indicators around the world have been disappointing, he noted growing concern over the strength of the global economy.

Asked whether an agreement ending the US-China trade war was likely to call into question the prospect of a rate cut, Jerome Powell retorted that Fed members "do not focused not only on a given event or a single piece of economics ".

The leader, who has signaled his willingness to complete his four-year term despite Donald Trump's criticism, also said that if the risks persist, the Fed would use "appropriate tools to support the American expansion ".

For now, in a decision - however not unanimous - the Fed has kept rates between 2.25% and 2.50%.

As expected, the Fed also removed the word "patience" from a future rate adjustment in its press release. In addition, she noted that the economy had progressed at a "moderate" and not "solid" pace.

"Given these uncertainties and sluggish inflation, the Committee will closely monitor the implications of future economic data" and stands ready to "act", ie to lower rates.

The next monetary meeting is scheduled for July 30th and 31st, and already an overwhelming majority of financial players are predicting lower rates, according to the evolution of futures products.

This announcement resulted in the dollar falling against the euro and the major currencies.

The Fed has also lowered its inflation forecast for this year to 1.5% instead of 1.8% projected in March but left its growth forecast in the state at 2.1%.

A member of the monetary committee (FOMC), James Bullard of the regional office of Saint Louis, Missouri, voted against the decision to maintain the rates because he would have preferred to lower them by a quarter point now.

This is the first time since December 2017 that a participant opposes the Committee's decision.

- Pressures -

In recent months not only the financial markets and the Trump administration are pushing for a rate cut, but the world's largest economy has shown mixed signs, especially on the side of inflation that still does not reach the target of 2 % that the Fed considers sound for the economy.

For many economists, like JPMorgan Chase's, there is almost one in two odds (45%) for the world's largest economy to go into recession next year. The Fed however expects 2% expansion in 2020 instead of 1.9% three months ago.

Manufacturing is starting to show signs of weakness, according to recent indicators, and job creation slowed in May.

Especially the resurgence of trade tensions with China greatly darkens the horizon.

President Donald Trump, however, has reported a resumption of dialogue and he will meet his Chinese counterpart Xi Jinping at the G20 summit next week in Japan.

In addition to these major trends, there is Donald Trump's invective against a central bank whose monetary policy he has been challenging since the end of the year.

Shortly before this monetary meeting, it was learned that the White House had actively explored in February the possibility of depriving Jerome Powell of his title of president to remake a simple governor. A project that is "not relevant now," assured Donald Trump's chief economist Larry Kudlow.

But on Tuesday, Trump left doubt behind when reporters asked him if he intended to demote Mr. Powell: "Let's see what he's going to do," he said.

President Trump has also criticized the European Central Bank (ECB) for dropping the euro against the dollar by planning to stimulate again the sluggish economy, which he says is "unfair" for the United States .

The boss of the ECB Mario Draghi immediately defended himself from wanting to act on exchange rates.

? 2019 AFP