(Bloomberg) -- Two regional Federal Reserve bank chiefs pushed back Thursday against the growing consensus view that the central bank is all but certain to cut rates at its July 30-31 meeting, contending the economy is doing just fine and inflation is near their 2% target.
Federal Reserve Bank of Atlanta President Raphael Bostic told reporters after a speech in Atlanta he’s skeptical of the need to cut rates, adding “I am not seeing the storm clouds generating a storm yet.’’ Thomas Barkin from the Richmond Fed said that with unemployment low and consumers spending, it’s “hard to make a case for stepping on the gas.’’
Both regional Fed chiefs, who do not vote this year on the policy-setting Federal Open Market Committee, cited the Dallas Fed’s trimmed mean measure of inflation, which has also been highlighted by Fed Chairman Jerome Powell and has come in more consistently around 2% in recent months. That gauge strips out a certain proportion of items whose prices have risen or fallen the most in any given month.
Markets have fully priced in a rate cut for the FOMC July meeting, with increased odds of a half-point cut, after Powell in two days of congressional testimony emphasized that risks from a global slowdown are growing. He also said that the strong U.S. June jobs report didn’t affect his view of monetary policy.
“From an employment perspective, the economy continues to perform in a very positive way,’’ Bostic said in Atlanta. “And inflation, the numbers I think are not as bleak as some others might suggest. For me, in terms of performing on our dual mandate, the aggregate numbers look pretty good.’’
The Fed’s dual mandate includes goals of maximum sustainable employment and price stability, which the central bank has defined with its 2% inflation target.
“Inflation may well be closer to target than one might think,’’ Barkin said at a conference in Victor, Idaho. “I don’t see the current levels of inflation or inflation expectations as a trigger for additional accommodation.’’
--With assistance from Michael McKee.
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