SMM News: today, US President Donald Trump once again called on the Federal Reserve to cut interest rates on Twitter. Kansas City Fed Chairman Esther George said she opposes interest rate cuts to raise inflation and warned that rate cuts could create asset price bubbles and eventually lead to an economic downturn.
"low interest rates could fuel asset price bubbles, create financial imbalances and eventually lead to recession," she said. In the current situation, the unemployment rate is well below its expected long-term level, and I see no reason to worry that inflation is slightly below its long-term target. "
The George, which has voting rights at the FOMC this year, has been one of the more hawkish members of the Fed.
Us President Donald Trump has repeatedly called on the Federal Reserve to cut interest rates to promote faster growth in the US economy, noting that inflation is below target as a reason to call for the Fed to cut interest rates.
In response, George said: "the current level of inflation may be troubling Fed officials and financial market participants, but in the context of economic growth and job growth, it does not need Fed policy to respond."
The Robert Rosener team of Morgan Stanley economists expects the Fed to cut interest rates by 50 basis points if the US economy gets substantially worse.
Trump has repeatedly said the Fed should cut interest rates. Earlier this month, he asked the Fed to cut interest rates by one percentage point and implement quantitative easing. This means buying more bonds and printing paper coins to stimulate the economy. Trump said on Twitter that this has the potential to allow the U. S. economy to "take off like a rocket."
Over the past three years, the Fed has been committed to the gradual normalization of monetary policy. The benchmark interest rate has gradually risen from a de facto zero to a range of 2.25 to 2.5. Plans to buy bonds have stopped. However, the Fed still holds far more Treasuries than it did before the financial crisis.