(Add the word deleted “target” in the first paragraph, corrects the formatting error)
NEW YORK (Reuters) – President of the Cleveland Federal Reserve Bank, Beth Hammack, said on Tuesday that she is not urgently seen in order to reduce interest rates when there is still a lot of uncertainty what the commercial prices will do to inflation, which is still above the central bank.
“Given the resilience of the economy so far, the risks of maintaining the current policy framework seem weak, and I do not see a weakening of the economy which deserves miles of imminent rate, although I remain attentive to this possibility,” said Hammack in the text of a speech to be made in London.
The manager, who has no voting on the Federal Committee for the Free Rate Setting Market this year, said that in the middle of a lack of clarity, it is a good thing for the Fed to search for additional information before changing the policy. “It may well be that the policy remains pending for a while before the committee indicates very modest cuts to return the policy to a neutral framework,” she said.
Last week, the FOMC held its interest rate objective of the day overnight between 4.25% and 4.5% while the officials adopted a waiting approach to prospects. Many central bankers do not know how the constantly evolving matrix of President Donald Trump taxes will put pressure on inflation and, therefore, they are cautious about the evolution of interest rate policy.
But two Fed officials in recent days – Governor Christopher Waller and Vice -President of the Michelle Bowman supervision – said they were open to the reduction in interest rates at the FOMC meeting in late July. Waller is widely considered as a possible successor to President Jerome Powell in the middle of Trump’s stable calls to rate discounts, while Bowman was recently raised to the role of the first Fed Bank supervisor by Trump.
Hammack warned in his remarks that, with regard to monetary policy in uncertain weather, “I prefer to be slow and move in the right direction than to move quickly in the wrong.”
She noted that the Fed still has a long way to go to obtain inflation to its target of 2% and that there is no certainty if the prices will have a unique impact on inflation or if the impact will be more persistent. It is possible that “coming after a long period of high inflation, consumers and companies can react differently to this event that what could otherwise have been the case.”
Hammack said in his speech that the economy was in a solid position and that the labor market seems strong. It described the current state of monetary policy as “modestly restrictive”.
(Report by Michael S. Derby; edition by Chizu Nomiyama)
