Fed was divided on rate cut, wanted to avoid appearing on path for…

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Federal Reserve policymakers were deeply divided over whether to cut interest rates last month but were united in wanting to signal they were not on a preset path to more cuts, a message not likely to sit well with U.S. President Donald Trump.

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WASHINGTON (Reuters) – Federal Reserve policymakers were deeply divided over whether to cut interest rates last month but were united in wanting to signal they were not on a preset path to more cuts, a message not likely to sit well with U.S. President Donald Trump.

FILE PHOTO: Federal Reserve Chair Jerome Powell holds a news conference following the Federal Reserve’s two-day Federal Open Market Committee Meeting in Washington, U.S., July 31, 2019. REUTERS/Sarah Silbiger/File Photo

Minneapolis Federal Reserve Bank President Neel Kashkari, who does not have a vote on the Fed’s monetary policy committee this year but participates in policy discussions, urged the Fed on Wednesday to use pledges about future policy, known in central banking as “forward guidance,” to boost the economy.

The July 30-31 policy meeting also included discussion of the Fed’s research into potential changes to its approach to setting policy. A number of policymakers said the Fed could have been more aggressive in using bond purchases to fight the 2007-09 recession.

However, policymakers also said tools like bond purchases and forward guidance might not be enough to eliminate the risk of policy being hampered in the future when the Fed’s benchmark rate gets close to zero.

Reporting by Jason Lange; Additional reporting by Lewis Krauskopf and Karen Brettell in New York; Editing by Andrea Ricci


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Federal Reserve policymakers were deeply divided over whether to cut interest rates last month but were united in wanting to signal they were not on a preset path to more cuts, a message not likely to sit well with U.S. President Donald Trump.

Source: {authorlink}

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