Three Federal Reserve policymakers had some arguments on Tuesday about likely U.S. interest rate cut later this month. These three chiefs of Federal Reserve Banks of Chicago, Dallas and San Francisco believed that nothing was said about how Federal Reserve wants to cut interest rate, how deep it should be and if it is needed or not.
Chicago Fed President Evan think about a 50 points cut before end of the year and its impact on inflation to go up. He said that such a cut is needed for getting to 2% inflation target by 2020. He and others are concerned about losing their credibility if they continue to undershoot, since by this way, their policies will become less effective.
In other hand, Robert Kaplan, Dallas Federal Reserve, didn’t believe in interest rate reduction unless as a tool for regulating bond curves. He pointed out to the risks toward bond investors and the shape of the bond curve and its inversion as consider it as a warning sign of recession!
But San Francisco Fed Bank President, Mary Daly, think in another way and she said that I don’t know if economy conditions will get better by rate cuts or we should do something with economy itself not by additional stimulus.
Fed Chairman Jerome Powell reiterated on Tuesday that that they act as appropriate to keep economy in true way. He added that growth should be helped by a strong labor market and reduction of uncertainties.
Federal Reserve Bank meeting will be on July 30-31.