Investors fully expect a quarter-point cut at the Fed's July 30-31 gathering, according to pricing in interest-rate futures, and the debate has moved on to whether officials could ease by a more aggressive, half-percentage point.

Chicago Fed President Charles Evans, speaking with reporters later on Tuesday in Chicago, discussed the merits of cutting by a half point without clarifying whether he backed making such a move. “There is an argument that if I think that it takes 50 basis points [bps] before the end of the year to get inflation up, then something right away would make that happen sooner,” he said, adding that he was not worried about inflation taking off unexpectedly.

Evans also said that policymakers favoring a risk-management approach to lowering borrowing costs might prefer to move more slowly, and he noted that the U.S. economy “is doing well.”

Global Links

At the event in Paris, Powell spoke broadly about the importance of international linkages among economies and their common challenges. He specifically focused on low rates of inflation and low interest rates, which are likely to hit zero again the next time central banks need to stimulate their economies.

“This proximity to the lower bound poses new complications for central banks and calls for new ideas,” Powell said, suggesting that central banks should look beyond tools such as bond buying and forward guidance used in the last crisis. “We must continue to assess additional strategies and tools to bolster our economies and meet our inflation and employment mandates.”

The Fed is engaged in a year-long review of strategies such as average inflation targeting, where a central bank runs inflation at slightly higher levels than its goal, to make up for periods when it was too low. The exercise has included a number of public-listening events around the country to hear from representatives of the labor, business, and low-income communities about the economy and monetary policy.

The Fed has mostly missed its 2 percent inflation target since it adopted that goal in 2012.

Powell also noted in his remarks that demand for accountability and transparency are higher after the financial crisis. The Fed chairman has been persistently attacked by Trump for his policies.

“Our audience has become more varied, more attuned to our actions, and less trusting of public institutions,” Powell said. “Central banks must speak to Main Street, as well as Wall Street, in ways we have not in the past, and Main Street is listening and engaged.”

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