Feb 24 (Reuters) - Two Federal Reserve officials on Tuesday signaled no near-term appetite to change the setting of central bank interest rate policy.
Markets expect the Fed to lower rates again this year but officials, faced with a stabilizing job market and uncertainty over whether inflation pressures will moderate back to target, have not given much guidance about the prospect for more reductions in the cost of short-term borrowing.
“I think that it's quite likely that it'll be appropriate to hold in the current range for some time,” Federal Reserve Bank of Boston President Susan Collins said as part of a panel discussion at a conference on technology held by her bank. But she added “there are different scenarios that are possible, and so it'll be important to continue to really take that patient, deliberate approach to making policy decisions.”
Richmond Fed leader Thomas Barkin, who was on the same panel, said that monetary policy is “well positioned” to deal with the risks around the economic outlook.
Both officials said that while they are seeing signs of stability for a job market that’s in a low-hire, low-fire environment, they are still seeking evidence that inflation will moderate further. Inflation has been steadily above the central bank’s 2% target.
They both noted the recent Supreme Court decision invalidating much of President Donald Trump’s trade tariffs, which the president responded to by imposing even more tariffs, is unlikely to have a huge impact on the economy.
Collins also said that the current setting of monetary policy is mildly restrictive or close to neutral. Last year the Fed cut its interest rate target by three-quarters of a percentage point to between 3.5% and 3.75%, holding that rate steady at its late January Federal Open Market Committee meeting.
To justify cutting rates again, “I am looking for more confidence” that the process of inflation pressures easing resumes, Collins said. She added that her default outlook “would be that later this year that we might expect to see” inflation pressures cooling off.
Reporting by Michael S. Derby; Editing by Lincoln Feast.
