US Fed Member: More Stimulus 'is Not Needed'

US Fed Member: More Stimulus 'is Not Needed'

U.S. Federal Reserve officials remain divided following a quarter-point interest rate cut earlier this week, as three of them spoke out and defended their respective views on Friday, signaling a growing split among monetary policymakers amid rising risks to and uncertainties in the U.S. economy. "I can not think of a time where in the aggregate the consumer has been in better shape", Clarida said in an interview with broadcaster CNBC. "We are going to take this meeting by meeting...and as we get into the October meeting and beyond we'll take it on a case by case basis but again, we will act as appropriate to sustain a strong labor market and price stability".

The Fed approved a second quarter-point rate cut on Wednesday by a vote of 7-3, the first time there have been as many as three dissents since September 2016 and the first time that there had been dissents going in opposite directions in almost five years.

"Evolving market models, along with low interest rates, are creating a new type of potential financial-stability risk in commercial real estate", Mr Rosengren said on Friday in remarks prepared for a speech in NY.

"It is prudent risk management, in my view, to cut the policy rate aggressively now and then later increase it should the downside risks not materialize", said Bullard.

But even those who agree with lower rates see the situation differently, with St. Louis Fed President James Bullard arguing that the Fed should have cut deeper this week to ward off weakness that includes a manufacturing sector which "already appears to be in recession". He's been a leading voice on the United States central bank's rate-setting Federal Open Market Committee in advocating for higher rates in recent years and has often cited what he sees as overheating real-estate markets in Boston and elsewhere. But shared office space often pays higher rent than other types of commercial offices, making it an attractive option for property owners trying to squeeze more yield out of their assets in a low-interest-rate environment, Rosengren said.

Federal Reserve Bank of Boston President Eric Rosengren, who wanted to maintain the target range for the federal funds rate at the previous level, apparently held a different view with Bullard on inflation. The Fed lowered rates on Wednesday by 25 basis points for the second time this year. Rolf said they did not receive an explanation as to why the trip was cut short. "One of the factors behind that is that the Fed continues to baffle investors".

The projections are issued anonymously, so it is unclear where the more influential officials, and most importantly Powell and Clarida, fit in that mix. "The FOMC will take decisions meeting by meeting".

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