An interest rate cut by the US Federal Reserve seems imminent with more and more Fed policymakers reportedly voicing their support for rate cuts starting next month in view of a sharp fall in inflation numbers.
Colling labour market in the country is another reason for them to flag the need for a cut in interest rate sooner than later.
Fed signals potential rate cut in September
“For me, barring any surprise in the data we’ll get between now and then, I think we need to start this process” of lowering rates, Philadelphia Fed Bank President Patrick Harker told Reuters in an interview.
“I think a slow, methodical approach down is the right way to go,” Harker said.
Boston Fed President Susan Collins also struck a similar tone, signalling her likely support for a rate cut at the US central bank’s policy meeting in September.
“I do think that soon it is appropriate to begin easing,” Collins said in an interview with Fox Business on the sidelines of the annual global central banker economic symposium in Jackson Hole, Wyoming.
“Inflation has eased quite a lot and the labour market is healthy,” she said.
With preservation of that health a priority, Collins said, “I think a gradual, methodical pace (of interest rate cuts) once we are in a different policy stance is likely to be appropriate.”
Their views, however, contrast a bit with Kansas City Fed Bank President Jeff Schmid, one of the US central bank’s more hawkish policymakers.
“We’ve got some data sets to come in before September,” Schmid said in an interview with broadcaster CNBC, referring to the Fed’s policy meeting on September 17-18.
“There is some room to consider where we go from here but I frankly think we’ve got time,” he said.
Still, he added that “it bears looking harder” at the recent rise in the unemployment rate, which measured 4.3 percent in July.
The US central bank is widely expected to begin reducing its benchmark policy rate at its upcoming meeting, with most Fed officials buoyed by encouraging inflation data and increasingly anxious about the health of the job market, Reuters reported.
The Fed targets 2 percent annual inflation by the personal consumption expenditures price index; by that gauge inflation was 2.5 percent in July.
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