Fed's Barkin sees little case for cutting interest rates

Cornelia Mascio
Luglio 12, 2019

Federal Reserve Chairman Jerome Powell on Wednesday set the stage for the first USA interest rate cut in a decade later this month, pledging to "act as appropriate" to defend an economic expansion threatened by trade disputes and a global slowdown.

Though the outlook for economic growth is "solid", boosted by consumer spending, business spending has been "lackluster" and sentiment has been soft, Brainard said.

President Donald Trump has repeatedly attacked the Fed for raising rates four times a year ago and has called for a full percentage point cut. But resolving issues around the unevenness and distribution of that growth may be beyond monetary policy. But Trump's statements spooked financial markets so decisively, and the threats to the global economy became so palpable, that an interest rate cut of at least 25 basis points has been baked in for the Fed's July 30-31 policy meeting, a message Fed Chairman Jerome Powell is expected to reinforce when he testifies before a congressional committee today. The goal: to inoculate the world's biggest economy against the risk that weakening global growth and continued trade tensions between the United States and major trading partners including China will continue to sap investment and business confidence, crimping growth.

At the Fed's last policy meeting in mid-June, eight of the 17 policymakers saw the need for at least one rate cut by year's end, and Powell told reporters afterwards many others were leaning in that direction.

Investors expect that cut with near 100% certainty.

Williams' remarks represent a sharp shift from his assessment in May, when he was asked whether a rate cut was needed to support inflation.

With the Fed's current preferred measure of inflation running at 1.6%, below the 2% target, some policymakers argue the central bank needs to do more or risk losing public trust that it takes the target seriously.

Atlanta Fed President Raphael Bostic said Thursday that he was not concerned about the failure of the central bank to achieve its 2% annual inflation target.

But he added that his analysis of inflation expectations, based on surveys of professional forecasters and business executives, left him unconvinced that expectations are slipping.

Altre relazioniGrafFiotech

Discuti questo articolo

Segui i nostri GIORNALE