The US Federal Reserve will continue to act “as appropriate” to sustain the economic expansion in the world’s biggest economy, Fed Chair Jerome Powell said on Friday (Sep 6) in Zurich, sticking to a phrase that financial markets have read as signalling further interest-rate reductions ahead. “Our obligation is to use our tools to support the economy, and that’s what we’ll continue to do,” Powell said at the University of Zurich. Still, he said, “We are clearly at a time where there is a range of views” among Fed policymakers meeting Sep 17-18 to decide on rates. Powell’s careful wording reflects a split within the US central bank about how best to respond to an economy where the job market and consumer spending are strong but rising trade tensions between Beijing and Washington, Britain’s possibly messy exit from the European Union, and a broad global slowdown pose risks. Boston Fed President Eric Rosengren for instance has made the case for leaving rates where they are until those risks are more tangible in the economic data. Others including St Louis Fed President James Bullard have called for a half-a-percentage point interest-rate cut to get ahead of the trade war risks and bring the Fed’s policy rate more in line with market expectations. Meanwhile, financial markets are betting Fed policymakers will agree to split the difference and follow their quarter-point rate cut in July with another one later this month. Powell said policymakers will be closely watching geopolitical risks, financial conditions, and other incoming economic data as they weigh what to do. Mixed Data Fed officials are particularly focused on whether a drop in business spending and a manufacturing slump brought on by rising trade uncertainty is spreading to other parts of the economy. Factory activity declined in August as US President Donald Trump ratcheted up tariffs on imports from China, and China retaliated in kind. Fed research published earlier this week estimated that trade uncertainty could shave about US$200 billion from US GDP by early 2020, as companies hold off on investments. But so far there are few signs the uncertainty is translating into job loss. US job growth slowed more than expected in August, a government report showed Friday, but strong wage gains and a rebound in hours worked suggested resilience. Powell, who spoke a few hours after the jobs report, said it was his expectation the US and world economies would continue to grow moderately and would avoid any recession. But there are also troubling signs in financial markets, most notably an inversion of the Treasury yield curve, which historically has pointed to a recession 18 months to two years ahead. The Fed’s target range for its benchmark policy rate, now 2 per cent to 2.25 per cent, exceeds yields on nearly all Treasuries. Trump on Friday kept up his call for the Fed to lower interest rates, saying policymakers were wrong to raise them last year. Powell for his part said he wasn’t listening to Trump, or to a call from former New York Fed President Bill Dudley for factoring the 2020 presidential election into his rate-setting decisions. “Political factors play absolutely no role in our process, and my colleagues and I would not tolerate any attempt to include them in our decision-making or our discussions,” he said. “We are going to act as appropriate to sustain the expansion.” Powell’s remarks are the last publicly scheduled comments from a US central banker before the Fed’s September meeting.