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No need for interest rate cut – Fed's Esther George

No need for interest rate cut – Fed's Esther George

Mubasher: Federal Reserve Bank of Kansas City President Esther George sees no case for cutting interest rates to maintain inflation close to its 2% target, Reuters reported.

As several Fed policymakers voiced worries as inflation rate continued to run below its target, building a case for interest rate cuts, George described the undershoot as minor, especially with of US jobless rate remaining below its projected longer-run level.

“I don’t see an argument right now for a rate cut,” George was quoted by Reuters as saying at a gathering of the Economic Club of Minnesota.

“Lower interest rates might fuel asset price bubbles, create financial imbalances, and ultimately a recession,’’ she noted.

US inflation lost pace over the last year, and it is currently running below the Fed’s target.

There is a “little reason to be concerned” over the current low rates of inflation, the Fed official said, seconding the central bank’s “wait-and-see” stance with the absence of upward inflationary pressures.

“The current outlook for inflation appears to be benign,” she was quoted by the news agency.

Following several years of slow interest rate increases, the US central bank held its borrowing costs steady this year, partially citing cooling consumer prices.