“We are closely monitoring the implications of these developments for the U.S. economic outlook, and, as always, we will act as appropriate to sustain the expansion,” Powell said Tuesday at a conference in Chicago.

Stocks surged after Powell’s comments Tuesday, with the Dow Jones Industrial Average jumping 400 points. Calls have escalated in recent days for the central bank to cut interest rates to help boost the economy and counter the negative effects of Trump’s trade battles with China and Mexico.

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“I think it’s safe to say this is the first time Powell himself has opened the door to an actual rate cut,” said Mike Loewengart, vice president of investment strategy at E*Trade.

Wall Street investors now think there’s a 58 percent chance that the Fed will slash interest rates by the end of July, according to the CME FedWatch Tool. It’s a strong change from a month ago, when hardly anyone was predicting that interest rates would be cut this summer.

Some economists are forecasting a recession or sharp downturn if Trump moves forward with tariffs on all Chinese imports and a new tariff on all Mexican imports as soon as next week.

“Our cycle indicator has shifted out of ‘expansion’ to ‘downturn’ for the first time since 2007,” Morgan Stanley wrote in a note to clients this weekend. “This phase-change has historically meant a worse backdrop for returns and higher chances of recession or a bear market.”

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Trump has repeatedly urged the central bank to cut interest rates and has tried to nominate additional Fed governors who support his view that rates should be lower.

The Fed’s committee that sets interest rates will meet next on June 18-19, but the central bank is widely expected not to act yet, as it is still unclear whether Trump will move ahead with additional tariffs that he has threatened to put on China and Mexico.

“We don’t know how or when these issues will be resolved,” Powell said Tuesday.

Another Fed leader was even more direct this week in saying a rate cut may be needed soon.

“The direct effects of trade restrictions on the U.S. economy are relatively small, but the effects through global financial markets may be larger,” St. Louis Fed President James Bullard said Monday at a talk in Chicago. “A downward policy rate adjustment may be warranted soon.”

The U.S. benchmark interest rate is currently 2.25 percent to 2.5 percent.