Esther George, Fed, says that there is no need to reduce interest rates

The Federal Reserve does not need to lower interest rates to boost inflation, said Kansas City Fed President Esther George in a speech on Tuesday.

In fact, said George, low inflation is of little concern to financial market participants and economists, who fear that the central bank will exceed its target of 2% and therefore should relax the policy to stimulate activity. .

"By listening to the business leaders and local leaders in my area, I hear few complaints about the fact that inflation is too low. In fact, I am more likely to be" out of control. " listen to disbelief when I mention that inflation is as low as measured in several key sectors, "she said during a speech in Minneapolis. "This leads me to find that the inflation experienced by households and businesses is fundamentally different from the inflation perceived by financial market participants and many economists."

His comments come in the context of a public debate in which President Donald Trump repeatedly pushed the Fed to lower its benchmark interest rate, which was currently 2.25% to 2, 5%. Just Tuesday morning, the President tweeted that the Fed should lower its rates to keep pace with the easing monetary policy of the Chinese central bank.

George has identified the ongoing trade war between the United States and China, coupled with slowing growth abroad, as the two biggest threats to the US economy. But she said things were happening well in the US and she was not worried about a rate of inflation that the Fed's preferred gauge currently stands at around 1.6%.

Most people and business owners are looking at costs such as gas, food, housing and health care and are seeing a steady rise in prices, George said. With this in mind, she sees little reason to cut rates now. She fears that a rate cut will limit the Fed's room for maneuver in the event of an economic downturn.

"The current level of inflation is likely to cause confusion among central bankers and financial market participants, but in the context of a growing economy and job gains, it does not require reaction from the Fed, "she said.

George also pointed out the Fed's difficulties in trying to boost inflation to 2%, but said that it generally supported the goal even though inflation was allowed to move half a point in both directions. George is a voting member this year on the federal policy committee.