Two Fed officials disagree with decision to cut interest rates
July 31, 2019 @ 22:41 UTC
C slashed the target range for its overnight lending rate to 2% to 2.25% — 25 basis points below the previous level. Since 1987, there have been one or more dissenters at 37% of Fed rate meetings. Economists said this week’s two-day Fed meeting had a higher chance of splitting central bank officials because of the recent improvements in economic data. A divide between officials makes it harder for markets to chart the path of future Fed policy.
Rosengren and George had publicly questioned cutting rates ahead of this week’s meeting. St. Louis Fed President James Bullard was also seen as a possible dissenter if the Fed went for a deeper rate cut. In late June, he said a 50 basis point move would be overdone.
New York Fed President John Williams surprised markets earlier this month when he said in a speech that “it’s better to take preventative measures than to wait for disaster to unfold,” adding to market expectations of a more aggressive 50 basis point rate cut. The Fed later said Williams was not talking about current policy in his comments. The following day, Boston’s Rosengren appeared on CNBC and said he didn’t see a need to trim the federal funds target rate range, which is now between 2.25 and 2.5%.