Published: Fri, July 12, 2019
Finance | By Loren Pratt

Fed's Williams says case for a U.S. rate cut is stronger

Fed's Williams says case for a U.S. rate cut is stronger

After Fed Chairman Jerome Powell outlined in Congressional testimony this week how weak global growth posed risks to the United States that might warrant lower rates, Bostic said, "I am not seeing the storm clouds actually generate a storm yet". "And they are not materially changing their plans". Visit MarketWatch.com for more information on this news.

The tariffs were not levied, but "it was a bit of a confidence shock, Powell told the Senate Banking Committee".

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.

"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. Bostic is not a voting member of the Fed's interest-rate committee but will be in 2021.

But they 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. But Powell hinted that the Fed might need to decrease borrowing costs through rate cuts in order to sustain the expansion.

That added a full additional rate cut to the one investors already had expected, and added market pressure to the Fed's growing list of concerns.


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.

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

In prepared remarks released before the hearing, Powell contrasted the Fed's "baseline outlook" of continued USA growth against a considerable set of risks - including persistently weak inflation, a slowdown in other major economies, and a downturn in business investment driven by trade risks.

Bostic said that even recent weak inflation data may not be as worrisome as it might seem. "We have issues around inflation expectations being soft, and obviously inflation data continuing to run below 2%".

"If the public comes to believe that a persistent downside miss to the 2% goal means the FOMC is not committed to that goal, then there is a problem", Bostic said.

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