U.S. Fed divided on monetary policy
WASHINGTON, United States (AFP) — US central bankers appear increasingly divided on the best course to preserve economic expansion, without fueling dangerous speculative behavior on financial markets.
Meanwhile, amid concerns authorities were letting short-term interest rates slip out of control, the New York Federal Reserve Bank announced more aggressive steps to pump billions into the economy’s financial plumping over the next three weeks to alleviate a cash crunch.
Federal Reserve Vice Chair Richard Clarida said Friday “the center of gravity” of the central bank favored the second cut in the benchmark lending rate this year, and the Fed will act on “a case-by-case basis” at the final two policy meetings of 2019.
Still, three of the 10 voting members of the Fed’s policy-setting Federal Open Market Committee dissented from Wednesday’s decision to cut the benchmark borrowing rate by a quarter-point to a range of 1.75-2.0 percent.
James Bullard, president of the St Louis Federal Reserve Bank, said Friday he wanted to see a bigger rate cut to protect against rising risks of a downturn in the American economy amid trade uncertainty.
A half-point cut “would provide insurance against further declines in expected inflation and a slowing economy subject to elevated downside risks.”
Bullard has long argued that inflation has been stuck too far below the Fed’s 2 percent target, so the US central bank can afford to “cut the policy rate aggressively now” to boost the economy.