In a clear message to Wall Street, a Federal Reserve official ruled out an emergency cut in monetary policy. He warned that the central bank will take its time and think coolly over the next seven weeks.
In front of a persistent inflation and a resilient labor marketa Federal Reserve official said the U.S. central bank still has time to assess economic conditions before cut interest rates.
Speaking Thursday on a webcast of the National Association of Business Economists, Richmond Federal Reserve President Tom Barkinnoted that economic conditions still show strength and “do not justify a quick reaction by the central bank to cut interest rates“.
After a weak July jobs report last Friday that shook markets, Investors and economists wondered whether the Fed should act more aggressively on interest rate cuts.The Fed’s policy committee last week opted to keep the federal funds rate unchanged at its highest level since 2001, though Fed Chairman Jerome Powell said the committee could begin to ease policy “maybe” in September.
Barkin said there were two cases where the Fed would need to respond quickly with interest rate cuts: One would be a rapid rise in unemployment and the other a faster fall in inflation.“none of which is happening.”
More data on inflation
He also mentioned that while recent inflation data was more positive, with the latest reports showing easing price pressures in more parts of the economy, The forecasts do not indicate that inflation will fall much further from current levels during the rest of the year.
“Are you ready to declare victory over inflation or would you like to see a little bit more? That’s part of the question,” Barkin said.Companies are cautious about hiring, but they are not firing.
Barkin also said neither the data nor conversations with employers in his district indicated that mass layoffs were imminent. Barkin said the data showed that “cautious” companies had slowed hiring but were not laying off employees either.
“You have some room to see more on the labor side, you have room to see more on the inflation side,” Barkin said, noting that Fed officials will receive several additional economic data points before their next meeting on Sept. 17-18.It seems sensible to take the time and learn what we can over the next seven weeks.”
Source: Ambito
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