U.S. Federal Reserve policymakers will not surprise markets if they deliver on e...
WASHINGTON/NEW YORK - U.S. Federal Reserve policymakers will not surprise markets if they deliver on expectations and cut U.S. interest rates for the first time in a decade on Wednesday.
Boston Fed President Eric Rosengren, one of two current policymakers who was present when the Fed last initiated a rate-cutting cycle nearly 12 years ago, earlier this month said he does not want to ease policy “if the economy is doing perfectly well without that easing,” adding in a CNBC interview that the state of the U.S. economy is “quite reasonable.”
Rosengren and George are among the 10 people with a vote on rates on Wednesday, and they could shake up the Fed’s normally consensus-driven approach. If both policymakers dissent, that would make the onset of this rate-cutting cycle more controversial than any of the Fed’s last four. Powell may want to nod to dissenters’ concerns and signal that this may not be the first in a long series of cuts, or he may want to counteract the dissents and strongly reinforce a “dovish” Fed outlook, meaning one more biased to cutting rates than a “hawkish” stance.
The fact that there is even any question about a dissent from George, once among the Fed’s most hawkish members, is a sign of how much the economy has changed in recent years.George is not shy about speaking up. In 2013, she dissented seven times because of worries the Fed’s “aggressive” bond-buying would fuel unwanted inflation.
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