BCN-10 Fed official says interest rates nearing final goal

259

ZCZC

BCN-10

US-BANK-RATE

Fed official says interest rates nearing final goal

WASHINGTON, Jan 16, 2019 (BSS/AFP) – The Federal Reserve can “pause”
before taking another step to raise its policy interest rate which “may be
closing in on” its final destination, a member of the rate-setting committee
said Tuesday.

Esther George, president of the Kansas City Federal Reserve Bank, one of
12 regional banks under the central bank umbrella, said the Fed can no longer
assert with certainty that more rate hikes are on the way.

It was yet another signal to financial markets that the Fed, after a total
of nine increases in the benchmark lending rate in the past three years, will
hold off for a time.

“A pause in the normalization process would give us time to assess if the
economy is responding as expected,” George said in a speech prepared for
delivery in Kansas City.

She noted that the increases to date had had an effect on the economy “and
the effects will need to be watched carefully” but she said “we must
acknowledge that rates are approaching, and may be closing in on, our
destination of neutral” — the level that neither stimulates nor restricts
the economy.

“It is possible that some additional rate increases will be appropriate.
But making that judgment is not urgent and should depend on a careful look at
the data” to know how far and how fast the Fed needs to move, George said.

With financial markets increasingly concerned about the slowing of the US
and global economies, George said uncertainty had increased due to the trade
confrontations under President Donald Trump.

And presiding over the regional Fed at the center of the American farm
belt, George said farmers were feeling the impact.

“Uncertainty about trade policy and global economic growth has increased,
possibly causing businesses to postpone or rethink capital spending
projects,” she said.
The farm sector is suffering from “a prolonged downturn…made worse by
retaliatory tariffs on US farm products.”

China has imposed steep tariffs on US soy beans, which essentially halted
imports as a result of Trump’s decision to slap punitive duties on more than
$250 billion in Chinese goods.

BSS/AFP/HR/0944