🔥🔥🔥🔥Disagreements within the Federal Reserve remain! A senior official insists that there is no need for rate cuts at the moment!!!!
Cleveland Fed President Mester said on Tuesday that the current restrictive nature of interest rates is only "moderate," and officials may keep borrowing costs stable for some time. Mester stated that despite recent progress, the Federal Reserve still has "some distance to go" in reaching its inflation target. She also mentioned that official data is lagging and may not fully capture current dynamics, including the recent rise in oil prices which could push up inflation expectations.
"It is very likely that before the committee initiates very modest rate cuts to return policy to neutral, policy will remain unchanged for quite some time," Mester said in prepared remarks for a conference in London. Federal Reserve officials have maintained interest rates steady for the fourth consecutive meeting this month to give themselves more time to observe how U.S. President Trump's tariffs and other policies will affect inflation and growth. Tensions in the Middle East have also increased risks to the global economy.
The latest forecasts released at the June meeting show that, based on the median prediction, Federal Reserve policymakers still expect two rate cuts this year. However, the forecasts also show some disagreement, with seven officials expecting no rate cuts at all this year.
Mester indicated that the resilience of the economy suggests that the risks of keeping rates stable are low. She said she does not see any significant weakness in the economy that would warrant a rate cut, but is "vigilant" about that possibility. The Cleveland Fed president also mentioned that interest rates might be approaching neutral levels, where the Federal Reserve neither stimulates nor slows down the economy.
Officials who have spoken since that meeting have also offered a range of views on the timing of any actions. Both Fed Governor Waller and Vice Chair Bowman, who are appointed by Trump, believe that if inflation remains controlled, a rate cut could occur as early as July. San Francisco Fed President Daly suggested that the likelihood of a rate cut in the fall is greater.