Two Fed officials believe the Data Does not Support the Cut in Interest Rate

Two Fed officials believe the Data Does not Support the Cut in Interest Rate

2 Federal Reserve officials, who disagreed from the decision of central bank of cutting a key policy rate which was announced this week, said on Friday that they did not believe that the economic conditions justified this move.

The President, Eric Rosengren, of the Fed’s Boston regional bank, said that he did not see any “clear and compelling” explanation for the rate cut. The Head, Esther George, of the Fed’s Kansas City bank, said that she was willing to support a rate cut in the future in case the incoming data weakened.

On Wednesday, the Fed approved by an 8 to 2 vote for a quarter-point cut in the benchmark interest rate of the Fed, and moving it lower to a new range of 2 percent to 2.25 percent.

Both the officials released their statements justifying their opposition on Friday.

The Financial markets fell greatly after the action of Fed as they had been expecting a half-point cut and the stronger language was holding out the promise of further rate cuts to come. On Thursday, the administration of Trump sent the stocks down further with a surprising announcement that starting on September 1st he planned to impose ten percent tariffs on an additional 300 billion dollars in the Chinese imports that they had not already taxed.

Neither of the two officials, Rosengren and George mentioned the latest trade threat by Trump against China in their statements explaining the Wednesday dissents.