Mubasher: Federal Reserve Bank of Kansas City President Esther George views the central bank’s decision to cut rates last month as unnecessary, as the US economy remained strong.
“My sense was we’ve added accommodation, and it wasn’t required in my view,” George told CNBC.
The Fed slashed interest rates by 25 basis points (bps) at its July meeting, citing “global developments” and “muted inflation.”
George was one of two dissenters who voted to hold rates unchanged.
“With this very low unemployment rate, with wages rising, with the inflation rate staying close to the Fed’s target, I think we’re in a good place relative to the mandates that we’re asked to achieve,” she said.
US Treasury yields inched up after the CNBC interview was aired on Thursday.
The central bank cut rates at the time when the US and China remained embroiled in a trade conflict, and economies other than the US worldwide endured sluggish growth rates.
Such factors stoked fears that the world’s biggest economy was heading for a recession.
“As you look at global growth weakening and as you look at the amount of uncertainty associated with some of these trade issues, I think both of those are weighing on the outlook,” George said.
Last May, George said at a gathering of the Economic Club of Minnesota that interest rate cuts would not be necessary to keep inflation close to the Fed’s 2% target.
“Lower interest rates might fuel asset price bubbles, create financial imbalances, and ultimately a recession,’’ she said then.