Federal Reserve Chairman Jerome Powell said Thursday that the U.S. economy was hit by a severe “confidence shock” in May from which it has only partly recovered.
“You saw business confidence surveys…quite negative, fairly broadly,” Powell said, in testimony to the Senate Banking Committee.
“Some of that has recovered,” but only after the Fed “stepped forward” and said it was willing in lower interest rates, Powell said.
The Fed chairman’s comments answer the question of why the central bank seems poised to ease monetary policy as soon as the end of the month.
In his testimony to the House on Wednesday, Powell set the stage for a rate cut as early as the end of this month, saying trade uncertainties and global growth were weighing on the economy.