The Federal Reserve building, in Washington, on June 14, 2022.Sarah Silbiger/Reuters
Federal Reserve policy makers on Thursday lined up in support of U.S. interest-rate cuts starting next month now that inflation is well down from its highs and the U.S. labour market is cooling, though one signalled he is in no rush to ease policy.
“For me, barring any surprise in the data we’ll get between now and then, I think we need to start this process” of lowering rates, Philadephia Fed Bank President Patrick Harker said in an interview with Reuters. “I think a slow, methodical approach down is the right way to go.”
Boston Fed President Susan Collins struck a similar tone, signalling her likely support for a rate cut at the U.S. central bank’s policy meeting next month.
“I do think that soon it is appropriate to begin easing,” Ms. Collins said in an interview with Fox Business on the sidelines of the annual global central banker economic symposium in Jackson Hole, Wyo. Inflation has eased “quite a lot,” and the labour market is healthy, she said.
With preservation of that health a priority, Ms. Collins said, “I think a gradual, methodical pace (of interest rate cuts) once we are in a different policy stance is likely to be appropriate.”
Their view contrasts a bit with Kansas City Fed Bank President Jeff Schmid, one of the U.S. central bank’s more hawkish policy makers.
“We’ve got some data sets to come in before September,” Mr. Schmid said in an interview with broadcaster CNBC, referring to the Fed’s policy meeting on Sept. 17-18. “There is some room to consider where we go from here, but I frankly think we’ve got time.”
Still, he added, “it bears looking harder” at the recent rise in the unemployment rate, which measured 4.3 per cent in July. “I’m going to let the data show where we lead … I would agree with several of my colleagues that you probably want to act maybe before (inflation) gets to two (per cent) but that sustainability to two I think is really important.”
The U.S. central bank is widely expected to begin reducing its benchmark policy rate at its upcoming meeting, with most Fed officials buoyed by encouraging inflation data and increasingly anxious about the health of the job market.
The Fed targets 2 per cent annual inflation by the personal consumption expenditures price index; by that gauge inflation was 2.5 per cent in July.