ATLANTA/VICTOR, Idaho (Reuters) - As Federal Reserve Chair Jerome Powell kept the focus Thursday on global risks that could trigger a Fed rate cut in coming weeks, his colleagues from regional Fed districts painted a rosier picture of continued U.S. economic growth and a solid business outlook.
Federal Reserve Board Chairman Jerome Powell testifies before a Senate Banking, Housing and Urban Affairs Committee hearing on the Semiannual Monetary Policy Report to Congress on Capitol Hill in Washington DC, U.
S., July 11, 2019. REUTERS/Leah MillisThe contrasting remarks show the dilemma the Fed faces as it heads toward an end-of-month monetary policy meeting now broadly expected to end with a rate reduction. On one hand - emphasized by Powell in Congressional hearings Wednesday and Thursday and seconded by the influential chief of the New York Fed and Fed Governor Lael Brainard — global trade and economic risks have put a dent in investment, inflation is well below the Fed’s 2% target, and the U.
S. expansion may need a shot in the arm. But as they polled businesses in their districts, Atlanta Federal Reserve Bank President Raphael Bostic and Richmond Federal Reserve Bank President Thomas Barkin saw an economy still humming, and no clear need for the Fed to ease monetary policy. “I am not seeing the storm clouds actually generate a storm yet,” said Bostic, who described himself as skeptical of the need to cut interest rates right now.
“With very few exceptions businesses are telling me the economy is performing as strong as it was. They are not seeing weaknesses in consumer engagement. And they are not materially changing their plans.” “I’ve been out in the last couple weeks and I’m talking to business people,” Barkin said on Thursday.
“They are not yet leaning back...They are not cutting jobs, They are not cutting investments that have already been underway. But they are cautious...They haven’t stopped, they’ve just slowed.” More detail about on-the-ground business sentiment may come next week when the Fed releases its latest Beige Book compendium of anecdotal information from the 12 Fed districts.
Powell has pointed to a number of national surveys as evidence business confidence took a hit recently, particularly in May after President Donald Trump threatened to impose tariffs on Mexican imports unless his demands about tougher immigration enforcement were met. The tariffs were not levied, but “it was a bit of a confidence shock, Powell told the Senate Banking Committee.
In Albany, New York Thursday, New York Fed President John Williams, added his voice in support of a rate cut, citing uncertainties around trade and global growth and soft inflation. “The arguments, for adding policy accommodation have strengthened over time.” Related CoverageBostic: Fed's focus is its mandates not market pricing for rate cutsBrainard, in a separate appearance in Scranton,.