© Reuters. FILE PHOTO: John C. Williams, President and CEO of the Federal Reserve Bank of New York, addresses the New York Economic Club in the Manhattan neighborhood of New York
By Trevor Hunnicutt
ALBANY, NY (Reuters) – Uncertainties weighing on the US economy and declining inflation have reinforced arguments for a rate cut, the Federal Reserve Chairman said Thursday. from New York, John Williams (NYSE).
"If any, the conditions, the arguments in favor of a political adaptation have been strengthened over time," Williams told reporters on the sidelines of an event held at the University of Toronto. Albany (State University) in New York.
"We have uncertainties, particularly related to trade and global growth, and expect inflation expectations to be low and, of course, inflation data continue to be lower than expected. at 2%. "
A simple employment report and a pledge by Washington and Beijing to resume active trade negotiations have not solved the problems the Fed uncovered at its last meeting, Williams said, echoing President Jerome Powell's comments in his testimony before the Congress this week.
At its meeting on June 18 and 19, many policymakers expressed the view that stimulus measures would soon be needed, according to the minutes of this meeting released Wednesday.
However, some policymakers also warned that the record was not yet strong enough to cut rates at their next meeting on July 30 and 31, a move seen by the markets as near certainty.
Williams said the economy was still in the right position and on the brink of exceeding its long-term potential this year, with no recession in sight. He told reporters that market expectations were already supporting a reduction in interest rates on corporate bonds and mortgages, boosting economic activity.
However, he pointed to worrying trends, including "declining manufacturing output", global growth and sluggish domestic job gains, and lower inflation than the central bank's target could have an impact. negative on consumers' decisions when they spend and fix their prices.
"The title data mask a more nuanced economic picture," Williams said of the longest economic expansion ever in the United States. The central banker based in New York has a vote on the committee that sets the rates.
The Fed has maintained its current overnight rate in a range of 2.25% to 2.50% since December.
"Monetary policy is an important tool, but it can not solve all the economic problems we face," Williams told the students.
Williams' remarks represent a drastic change from his May assessment, when he was asked if a rate cut was needed to support inflation. At that time, he said, "I do not think we're at this point today, and I do not think we'll be that way in the very near future."
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