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Fed battling growing view that it should cut rates

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NEW YORK Barely a week after the US Federal Reserve called a halt to interest rate hikes, policymakers are now battling a view growing in financial markets, and embraced by the Trump administration, that the Fed will need to cut rates before long.

Mr Larry Kudlow, President Donald Trump's top economic adviser, said on Friday on CBNC that while there is "no emergency", the Fed should cut rates to protect the US economy from slowing down.

But no fewer than five Fed officials in the past 24 hours have touted the underlying strength of the US economy and argued that the recent spate of weak data on business activity is more likely to be fleeting than lasting.

Even the Fed's two most dovish policymakers - the presidents of the St. Louis and Minneapolis regional banks - say they are not ready to agitate for the central bank to start reversing three years of rate increases.

On Friday, one of the bank's centrists, Mr Randal Quarles, the Fed Board of Governors vice-chair for supervision, offered an optimistic view of the US economy and said more rate increases may be needed if recent positive trends in productivity and investment continue.

The Fed last week kept its target range for short-term rates at 2.25 per cent to 2.5 per cent, and projections showed most policymakers do not see any hikes this year. - REUTERS