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US Fed official says current monetary policy should help support economic expansion
Source:Xinhua Published: 2020/2/11 10:16:47
A man walks by the US Federal Reserve building in Washington D.C., the United States, on July 31, 2019. (Xinhua/Liu Jie)
A senior US Federal Reserve official said on Monday that the central bank's current monetary policy should help support the US economic expansion, which is now in its 11th year.
"My colleagues and I on the Federal Open Market Committee had our most recent meeting about two weeks ago, when we decided to keep our target range for the federal funds rate unchanged at 1-1/2 to 1-3/4 percent. This policy setting should help support the economic expansion," Michelle Bowman, a member of the Board of Governors of the Federal Reserve System, said at a community bankers' conference in Orlando, Florida.
"My outlook for the US economy is for continued growth at a moderate pace, with the unemployment rate - which is the lowest it has been in 50 years - remaining low. I also see inflation gradually rising to the Committee's 2 percent objective," she said.
The Fed official noted that the national economic backdrop "looks very favorable" on the whole, which should be broadly supportive of local economies.
Bowman's comments came after the Fed said Friday that the current stance of monetary policy was appropriate as downside risks to the US economy had receded.
"Downside risks to the US outlook seem to have receded in the latter part of the year (2019), as the conflicts over trade policy diminished somewhat, economic growth abroad showed signs of stabilizing, and financial conditions eased," the Fed said in its semi-annual monetary policy report delivered to Congress.
The report also said that "the likelihood of a recession occurring over the next year has fallen noticeably in recent months," while possible spillovers from the effects of the novel coronavirus have presented a new risk to the US economic outlook.
Fed Chairman Jerome Powell is scheduled to deliver the report and testify on Capitol Hill on Tuesday and Wednesday.
The Fed lowered interest rates three times in 2019, cutting the target range of the federal funds rate by 75 basis points to 1.5-1.75 percent. After wrapping up its first monetary policy meeting of 2020 in late January, the Fed left interest rates unchanged and maintained a wait-and-see stance.
Diane Swonk, chief economist at Grant Thornton, a major accounting firm, believed that below-target inflation and cooler-than-desired wage gains are expected to prompt the Fed to cut rates at least once in 2020.
"Downside risks associated with the spillover from the coronavirus may force the Fed to act even more aggressively. The Fed is starting to realize that it has more tools to sustain the expansion than to right the ship once it capsizes," Swonk wrote last week in an analysis.
Posted in: AMERICAS