>> With a strong job market.>> US Federal Reserve Chairman Jerome Powell grilled by law makers Tuesday on one of the biggest looming threats to the booming US economy, President Trumps trade tariffs. What’s generally happened in the past to economic growth when we raised tariffs?>> Country’s that have gone in a more protectionist direction has done worse.
>> I’m going to stay on the macro effects of this trade policy. And we are gonna look back at this time, perhaps in a year, and say that's the point at which we turned the corner and the economy started taking a downturn.>> Trump introduced a series of tariffs this year on billions of dollars worth of products from Europe, Canada, Mexico, and China.
And all of those countries have responded in kind. Reuter's correspondent, Jonathan Spicer. Fed Chair Powell repeatedly said that he wants to stay in his lane to these Senators who are trying to draw him out on the Trump administration's trade policies and the potential risks to the economy. For the Fed which is really sitting pretty right now, it has inflation right where it wants it, unemployment is nice and low, growth is just gonna pick up more this year.
The Fed is almost in the perfect spot, and trade tariffs is a big risk for them.>> Senate Democrats also questioning Powell on whether the Fed is keeping a close regulatory watch on mega banks.>> Powell faced some heat from Senators about the perception that maybe the Fed is a little bit easier, a little bit more flexible with the biggest banks in the country.
Some of the biggest banks just squeaked by in the last Fed stress test. They received conditional approvals because of the tax cuts that came in earlier this year, and so the Fed sort of looked the other way.>> When the big banks' pants fall down, it's the American economy, American tax payers, American workers who gets stuck pulling them back up.
So I just, it looks like to me the Fed is headed in the wrong direction here.>> And the topic that he came to discuss? Interest rates, of course. Powell said the Fed still plans to continue raising interest rates gradually this year, choosing for now to focus on the solidly growing economy over long term risks.