Economy

Fed's Powell affirms rate cut view; others see USA economy humming

Fed's Powell affirms rate cut view; others see USA economy humming”

"The arguments, for adding policy accommodation have strengthened over time".

"We've got the uncertainties, especially related to trade and global growth".

Neither Barkin nor Bostic ruled out supporting a rate cut, which, according to minutes of the Fed's June meeting, has drawn support for a variety of different reasons - both the global tensions Powell has focused upon, as well as weak inflation and a sense that the Fed had unintentionally set policy too tight with its four interest rate increases past year.

At its June 18-19 meeting, many policymakers expressed the view that stimulus would be needed soon, according to the minutes from that meeting released on Wednesday.

President Donald Trump has repeatedly attacked the Fed for raising rates four times past year and has called for a full percentage point cut. He told reporters that markets' expectations are already supporting lower interest rates on corporate bonds and mortgages, stimulating economic activity.

But Williams pointed to a number of signs that economic momentum may be slowing, including "that manufacturing production is in decline", global growth and domestic job gains are slowing, and inflation below the central bank's target may be negatively affecting people's decisions when they spend and set prices.

Fed officials at their June policy meeting signaled those concerns might warrant lower rates, and "since then, based on incoming data and other developments, it appears that uncertainties around trade tensions and concerns about the strength of the global economy continue to weigh on the USA outlook", Powell said.

Earlier rounds of USA tariffs on trading partners including China had been dismissed as of little macroeconomic importance, with the Fed in early May still anticipating its policy rate would remain unchanged in a range of 2.25 per cent to 2.50 per cent for the rest of the year.

The Fed has kept its current benchmark overnight interest rate in a range of between 2.25% and 2.50% since December.

WASHINGTON, July 10 ― The US Federal Reserve over the course of its 105-year history has changed monetary policy in reaction to property crashes, war, financial bubbles and policymakers' gut instincts about where the economy was heading. At that time, he said, "I don't think we're at that point today, and I don't think we'll be at that point in the very near future".



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