This translation has been automatically generated and has not been verified for accuracy.Deep disagreements within the Federal Reserve over the economic outlook and how the U.S. central bank should respond will not stop policymakers from cutting interest rates at a two-day meeting that began on Tuesday.
Pushback from the opposite end is likely to come from Cleveland Fed President Loretta Mester, who opposed the Fed’s rate cut in July, and Philadelphia Fed President Patrick Harker, who only reluctantly supported it and says he wants to leave rates where they are “to see how things play out.” “The discord is extremely visible,” said Gregory Daco, chief U.S. economist at Oxford Economics. “If you look at the economy today, you look at an economy that’s bifurcated ... The key question is whether that weakness seeps through the economy, and whether that’s aggravated.”
Though the volatility isn’t expected to have a direct impact on the Fed’s setting of rates, it could weigh on Fed officials as they consider technical adjustments and guidance for their balance sheet outlook.Since the Fed’s 8-2 decision to cut rates in July, a move that Powell called a ‘mid-cycle’ adjustment, the economic data has delivered mixed signals.
Fed officials could see the development either as a risk to an already fragile growth outlook, which would support the case for more easing, or as a welcome boost to inflation, which would back a case for standing still for now.
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