Boston Fed chief says no immediate rate cut needed

Source: Xinhua| 2019-09-04 12:32:42|Editor: mingmei
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WASHINGTON, Sept. 3 (Xinhua) -- Federal Reserve Bank of Boston President Eric Rosengren said Tuesday that the U.S. Fed shouldn't cut rates under the current circumstances, signaling he might vote against lowering interest rates at a policy meeting later this month.

"If the data continue to indicate a U.S. economy growing slightly above the level considered to be the economy's potential growth rate, with continued gradual increases in wages and prices, then in my view, no immediate policy action would be required," Rosengren said in a speech delivered at Stonehill College in the northeastern U.S. state of Massachusetts.

"Concerns over tariffs and geopolitical uncertainties" have increased discussion around a possible economic downturn, and it is "clearly reasonable" to make the assessment that risks are elevated, said the Boston Fed chief. "Should those risks become a reality, the appropriate monetary policy would be to ease aggressively."

"However, to date, these elevated risks have not become reality, at least for the U.S. economy. Economic forecasts -- and ... many financial market indicators -- remain benign, consistent with a forecast of growth slightly above potential," said Rosengren, who is among the 10 members of the Federal Open Market Committee, the Fed's rate-setting body.

Rosengren's remarks followed U.S. President Donald Trump's renewed criticism of the Fed's monetary policy earlier on Tuesday, when the president tweeted that the U.S. Fed "fails to act" when "Germany, and so many other countries, have negative interest rates," urging the Fed to cut rates.

On July 31, the central bank trimmed the target for the federal funds rate by 25 basis points to a range of 2 percent to 2.25 percent after concluding its two-day policy meeting, amid rising concerns over trade tensions, a slowing global economy and muted inflation pressures.

Rosengren, along with Kansas City Fed President Esther George, dissented to the rate-cut decision, as they "preferred" to maintain the target range for the federal funds rate at the previous level.

At the Kansas City Fed's annual research conference in Wyoming in late August, U.S. Fed officials warned the U.S. economy faced downside risks from rising trade uncertainties, as monetary policy is not well suited to address adverse effects of trade disputes.