Saturday, 21 September, 2019

Fed's Bostic say US in 'good position' on both inflation and employment

Lights, Camera, Fed Rate-Cut Action Fed's Bostic says inflation is not trending away from target
Ginger Lawrence | 12 July, 2019, 17:57

Powell will testify again on Thursday before the Senate Banking Committee. "And they are not materially changing their plans". "The arguments, for adding policy accommodation have strengthened over time".

Fed staff concluded the rise in world tariffs had a likely "material" impact on the slowdown in global trade a year ago, and that "uncertainty surrounding trade policy could be leading firms to delay investment decisions and reduce capital expenditures".

Brainard, in a separate appearance in Scranton, Pennsylvania, piled on.

The Fed, which hiked rates four times past year, has kept its current benchmark overnight interest rate in a range of between 2.25% and 2.50% since December.

Federal Reserve Chairman Jerome Powell on Wednesday set the stage for the first US 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.

Powell's statement Wednesday boosted the USA stock market as it confirmed for many investors their expectations that the Fed will cut short-term rates for the first time in a decade at its next meeting in late July.

European Commission forecasts 'solid' economic growth for Malta
However, the projection does not take into account possible trade disruptions caused by a no-deal Brexit . Next year's growth is expected to accelerate to 0.7 per cent but remain the slowest in the bloc.

With investors in contracts linked to the Fed's targeted overnight lending rate putting the probability of a rate reduction at close to 100 per cent, "it would be unprecedented for the Fed to not cut", Lavorgna wrote.

Powell, in appearances on Capitol Hill this week, bolstered expectations such a cut is coming, and focused on the need to protect the United States against fallout from a weak global economy. Almost all officials cut their forecasts for the short-term rate that the Fed controls, compared to the previous meeting, the minutes said.

The hearing, part of the Fed chief's semi-annual testimony on monetary policy to Congress, took place against the backdrop of U.S. President Donald Trump's frequent criticism of the Fed and the White House's demands that the central bank lower rates.

Bostic said that even recent weak inflation data may not be as worrisome as it might seem.

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.

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.