(MENAFN- The Peninsula)
AFP
Washington: The US federal Reserve is in a position to proceed "more cautiously" with rate cuts given stubborn recent inflation and a resilient labor market, a senior bank official said Monday.
The Fed has moved rapidly since September to roll back high interest rates, cutting by a full percentage point as inflation falls from a multi-decade high toward the bank's long-term target of two percent.
Lower interest rates indirectly affect the cost of borrowing for US consumers, affecting the cost of everything from car loans to mortgages.
At the same time, economic growth has been relatively strong, and the labor market has remained resilient, despite some signs of weakening.
Last month, Fed officials indicated they only expect to make two quarter-point cuts this year, pushing financial markets to predict officials will remain on pause at the bank's next rate decision later this month.
"All along, I envisioned moving more quickly in the early stages of our easing campaign and then easing more gradually as the policy rate came closer to neutral," Fed Governor Lisa Cook told a conference in Michigan on Monday, according to prepared remarks.
"In addition, since September, the labor market has been somewhat more resilient, while inflation has been stickier than I assumed at that time," added Cook, who is a permanent voting member on the Fed's rate-setting committee.
"Thus, I think we can afford to proceed more cautiously with further cuts," she said.
While Cook did not specifically rule out another rate cut at the Fed's next meeting on January 28 and 29, her remarks underscore the Fed's position that wants to see further evidence of inflation falling toward two percent before it cuts rates again.
Futures traders currently see a roughly 90 percent chance that the Fed will remain on pause in January, keeping rates at their current level of between 4.25 and 4.50 percent, according to data from CME Group.
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