Fed Chair Powell signals USA interest rate hike

Marco Green
July 12, 2019

Federal Reserve Governor Lael Brainard, an influential member of the USA central bank's policy-setting panel, on Thursday signaled support for an interest rate cut to guard against the risks posed by soft inflation and uncertainty around trade and global growth.

"If anything, relative to earlier in the year, the conditions, the arguments, for adding policy accommodation have strengthened over time", Williams told reporters on the sidelines of an event at the University at Albany - State University of NY.

"Nearly all participants had revised down their assessment of the appropriate path for the federal funds rate over the projection period", said the minutes of the Fed's June 18-19 policy meeting released on Wednesday, adding "many participants indicated that the case for somewhat more accommodative policy had strengthened".

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.

The minutes came after Fed Chairman Jerome Powell said earlier in the day that crosscurrents such as trade tensions and concerns about global growth have been weighing on the USA economic activity and outlook.

Bostic does not now have a vote on Fed rate policy, but will participate in the debate when the Fed meets in three weeks in a session widely expected to reduce the Fed's overnight target interest rate by at least a quarter of a percentage point. Other policymakers have said the case for a cut is not clear cut.

The Fed has kept its current benchmark overnight interest rate in a range of between 2.25% and 2.50% since December. But resolving issues around the unevenness and distribution of that growth may be beyond monetary policy.

Other reports by Click Lancashire

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