The Federal Reserve should use its meeting in two weeks to aggressively cut inte...
ST. LOUIS/SAN FRANCISCO - The Federal Reserve should use its meeting in two weeks to aggressively cut interest rates, one U.S. central banker said on Tuesday.
The dueling views - from St. Louis Fed President James Bullard, who called for a half-a-percentage-point rate cut, and Boston Fed President Eric Rosengren, who saw no immediate need for any move - show the tight spot Fed Chair Jerome Powell finds himself in as the Fed’s next policy-setting meeting approaches.
But Americans continue to spend, wages are rising and employers keep adding jobs, suggesting a downturn is not on the horizon. Underscoring his concerns, data released earlier on Tuesday showed the U.S. manufacturing sector had contracted for the first time in three years. U.S. stocks slid and benchmark Treasury yields hit their lowest in three years on concern the drawn-out trade war was taking an increasing toll on the U.S. and global economies.
With the Fed’s policy rate only eight potential quarter-point rate cuts above zero - limited rate-cutting space to fight a downturn, he said - “I don’t want to use up that valuable space at a time where we actually think prices are pretty stable and the labor markets are pretty tight.”
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