Federal Reserve Chairman Jerome Powell is prepared to cut interest rates by a quarter percentage point later this month in what would be the central bank’s first reduction in borrowing costs in more than a decade. Citing slow global growth and ongoing trade tensions, policy makers are open to further cuts as they look to extend this record-long period of economic expansion.

“I’d like to go 25 basis points at the upcoming meeting,” St. Louis Fed President James Bullard, a 2019 voter and one of the central bank’s most dovish policy makers, told reporters last Friday. “I think easing cycle is a little bit strong for this situation,” citing episodes in the 1990s when the Fed made downward adjustments to sustain growth and mitigate the damage of external shocks.

The New York Fed took unusual action last week, walking back the comments made by its president, John Williams, that were interpreted as a call for a more aggressive policy move (~ half-point reduction). The action convulsed global markets, as investors were pricing a half-point reduction following Williams’ speech.

Williams, speaking at an academic conference, outlined the benefits of swift action, citing the Fed’s target range for its policy rate as 2.25% to 2.5%. The message was reinforced a short while later by Fed Vice Chairman Richard Clarida.

“You don’t need to wait until things get so bad to have a dramatic series of rate cuts,” Clarida told Fox Business Network. “We need to make a decision based on where we think the economy may be heading.” The Trump administration expressed support for more aggressive action from the Fed, with President Trump tweeting that he agreed “100%” with Williams’ initial recommendations.

Resilient U.S. economic data makes the case for a more modest move, prompting Chairman Powell’s decision to keep the Fed’s initial cuts to a quarter percentage point. Non-farm payrolls increased a robust 224,000 in June, retail sales data showed that consumer spending remains strong, and overall financial conditions have eased up despite rising global risks and tensions.

At his June press conference, Powell said the case for “somewhat more accommodative policy” had strengthened in the view of “many” on the Federal Open Market Committee (FOMC). He repeated this assertion at a speech in Paris on July 16.

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