Powell said Friday that the trade war is a “complex, turbulent” situation and that the central bank will “act as appropriate to sustain the expansion,” suggesting another interest rate cut may be coming but not the large decline that Trump has demanded.

“Our economy is in a favorable place,” Powell said, but he added that there are “significant risks" from slowing global growth and the U.S.-China trade fight. China just announced major new tariffs on U.S. products, the latest in an exchange of blows between the two nations that have caused numerous countries around the world to teeter on the verge of a recession.

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Trump lashed out at both Powell and China, blaming them for harming the U.S. economy.

“My only question is, who is our bigger enemy, Jay Powell or Chairman Xi?” Trump tweeted after Powell’s speech. Trump and his advisors have privately discussed ways to change who gets to vote on interest rate levels at the Fed.

Stocks dropped sharply after Trump tweets suggested he is preparing more retaliation against China with the Dow Jones industrial average closing down more than 623 points, or 2.4 percent. Trump wants the Fed to stimulate the economy to counterbalance any harm from his trade war, but Powell warned Friday there is only so much the central bank can do.

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“While monetary policy is a powerful tool that works to support consumer spending, business investment and public confidence, it cannot provide a settled rulebook for international trade,” Powell said.

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Trump has criticized the Fed almost daily this summer, calling on Powell to lower interest rates a full percentage point from just shy of 2.25 percent now down to 1.25 percent, the type of action that is typically done when the economy is in a recession or dangerous situation.

Powell delivered his remarks at Jackson Hole in front of about 150 economists and central bankers who are gathered for the Kansas City Fed’s annual monetary policy symposium. Most said the Fed chair is doing a good job and brushed off Trump’s tweets as political noise.

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"The president is desperate to keep growth high going into the election. The tax cut did not deliver promised levels of growth,” said Maurice Obstfeld, an economics professor at the University of California-Berkeley and former chief economist at the International Monetary Fund. “This is all about politics.”

Powell reiterated twice in his speech that the Fed’s overriding goal is to ensure the economy continues to grow and the central bank would do what was necessary to make that happen.

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“Our challenge now is to do what monetary policy can do to sustain the expansion so that the benefits of the strong jobs market extend to more of those still left behind,” Powell said.

Powell repeatedly characterized the U.S. economy as in a good place with low unemployment, solid growth and strong consumer spending, painting a picture of an economy that could possibly use a small boost but does not need massive aid.

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“The U.S. economy has continued to perform well overall, driven by consumer spending,” Powell said. “It will be appropriate at times for us to tilt policy one way or the other because of prominent risks.”

Wall Street investors now predict nearly a 95 percent chance the Fed will cut rates by a quarter of a percentage point at its upcoming meeting in mid-September to about 2 percent.

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“[Powell’s] clearest message is that a September rate cut remains likely,” said Eric Winograd, senior economist at investment firm AllianceBernstein. “They should cut faster and harder because the risks of doing so seem minimal to me. But that’s not where the Fed is yet, as Friday’s speech made clear."

After Trump announced his latest plans to put more tariffs on nearly all Chinese imports ahead of the busy Christmas shopping season, investors briefly thought the Fed might do a more dramatic interest rate cut, but a number of Fed leaders have made it clear there is little support for that.

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Fed leaders remain divided about whether any further interest rate cuts are needed at all.

“As I look at where the economy is, it’s not yet time, I’m not ready, to provide more accommodation to the economy without seeing an outlook that suggests the economy is getting weaker,” Kansas City Fed President Esther George said in a Bloomberg interview.

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There is concern among economists and some Fed leaders that interest rates are already very low, leaving little ammunition to aid the economy when a severe downturn hits.

“Nothing is moving dramatically in a negative direction,” Philadelphia Fed President Patrick Harper said in a CNBC interview. “I think we need to keep our powder dry so when that happens we have the policy space to move.”

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While most business leaders and economists say the trade war is driving all the problems in the economy, Trump continues to blame the Fed — and Powell.

“Our Federal Reserve does not allow us to do what we must do. They put us at a disadvantage,” Trump tweeted Thursday.

Powell, whom Trump appointed to the top job at the Fed, has avoided mentioning Trump by name or criticizing him, but the Fed chair did say dealing with trade policy uncertainty is a “new challenge” with “no recent precedents to guide any policy response.”