Fed officials in no rush to lower rates

The gaggle of Federal Reserve officials voicing no urgency to pivot to interest rate cuts continues to grow, with the head of the New York Fed on Thursday saying no reduction in borrowing costs was needed “in the very near term”.

With that remark, New York Fed President John Williams planted a flag alongside several other policymakers, signaling growing caution about moving too quickly to cut interest rates when inflation appears to be — at best - on a “bumpy” path back to the central bank’s two per cent annual target.

Inflation is proving to be a stickier problem than US central bank officials had anticipated it would be just a couple of months ago, while other measures of the economy show little signs of slowing down. That combination has pushed the anticipated start of an easing cycle further down the road.

The Fed’s stance is currently in a “good place” and “there’s no clear need to adjust monetary policy in the very near term” given where the economy now stands, Williams told reporters after a speech in New York. Williams, the vice chair of the central bank’s rate-setting Federal Open Market Committee, also said rate cuts will be needed “eventually.”

Meanwhile, Richmond Fed President Thomas Barkin, who had already noted his concerns about the breadth of inflation being hard to “reconcile” with a near-term shift to rate cuts, said the latest numbers “did not increase my confidence” that price pressures were easing on a broader basis throughout the economy.

Williams also nodded to the issues that have arisen in recent data reports, saying there “will likely be bumps along the way, as we’ve seen in some recent inflation readings.”