Boston Fed bank president says no to further rate cuts
Boston Federal Reserve Bank president Eric Rosengren on Monday signalled no willingness to support further interest rate cuts, saying that easing policy could encourage a worrying debt build-up.
"It is a bigger risk to encourage people to take on too much more risk at this time," he said, adding that doing so could worsen the next downturn and leave the Fed with little ammunition to encourage additional spending when it is needed.
"Global conditions are weak. So I'm not saying there aren't circumstances in which I would be willing to ease. I just want to see evidence that we are actually going into something that's more of a slowdown."
Mr Rosengren was one of two dissenting votes at the US central bank on its decision last month to cut borrowing costs for the first time since 2008.
Now, he said, he does not currently see a need for any further action.
Markets overwhelmingly expect the Fed to cut rates again at its Sept 17 to 18 policy meeting from the current 2 per cent to 2.25 per cent target. Meanwhile, Fed chairman Jerome Powell is slated to deliver a closely watched speech on Friday, where he is likely to weigh in on policy and economic outlook.
Mr Rosengren said unemployment trends are good and that signs point to inflation rising to the Fed's 2 per cent-a-year target, with the economy growing around a healthy 2 per cent rate.
US monetary and fiscal policy are already "accommodative," he said, meaning they support further growth.
Mr Rosengren said disagreeing with the Fed's policy path has not been easy.
"It's a consensus-driven organisation, and it should be. And so you should only dissent if you strongly disagree with where policy's going at the time." - REUTERS