Fed's George: It's 'Appropriate' to Hold Rates Steady for Now
15 January 2020 - 5:49AM
Dow Jones News
By Michael S. Derby
Kansas City Fed leader Esther George said Tuesday that while she
opposed all three of last year's rate cuts, she is OK with holding
monetary policy steady for now.
"Keeping rates on hold for now is appropriate in my view as we
assess the economy's response to last year's rate cuts and monitor
incoming data," Ms. George said in the text of a speech to be
presented in Kansas City, Mo.
Ms. George joined with Boston Fed leader Eric Rosengren last
year and argued that the Fed should only lower rates when
confronted with an actual weakening in the data. While the two
spoke for a broader block of officials without voting roles on the
rate-setting Federal Open Market Committee, the majority wanted to
lower rates to offset risks posed by slower global growth and trade
tensions.
Ms. George won't have a vote on this year's FOMC due to the
annual rotation of regional Fed leaders. The Fed signaled in
December that it doesn't expect to change rates this year.
Officials who have spoken over recent days have reiterated they see
no imminent need to change rates, to either higher or lower
levels.
Ms. George has an upbeat view on the economy for 2020.
"I continue to see the expansion supported by solid growth in
consumer spending, with continued weakness in manufacturing and
business spending, " she said. She added that she expects overall
growth to moderate to the longer-term trend of around 1 3/4 % to
2%, with the jobless rate staying at around 3.5%. Ms. George also
expects "benign" inflation readings.
Ms. George says it will be key to understand whether the 2019
rates were needed and if they "will need to be reversed if
headwinds fade."
The cuts may have also moved rate policy to a more neutral
level, she said. The official added it could also be the case "that
downside risks and uncertainties persist in a way that keeps
investment spending weak and spills over to the consumer, altering
the modal outlook and requiring further policy easing."
Write to Michael S. Derby at michael.derby@wsj.com
(END) Dow Jones Newswires
January 14, 2020 13:34 ET (18:34 GMT)
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