Two regional Federal Reserve presidents publicly dissented Friday over this week’s interest rate cuts, issuing separate statements arguing that economic conditions didn’t warrant easing.
“I do not see a clear and compelling case for additional monetary accommodation at this time,” said Boston Fed President Eric Rosengren in a statement. He pointed to unemployment rates near 50-year lows and inflation likely to inch higher to meet the central bank’s 2% target, the level the Fed considers healthy.
The Fed’s rate-setting committee voted at their July 30-31 meeting for the first cut in a decade, lowering rates a quarter-percentage point to counter uncertainty over President Donald Trump’s trade wars. The move came after months of public demands by Trump for lower rates despite a booming stock market, low unemployment and strong consumer confidence.
“Incoming economic data and the outlook for economic activity over the medium term warranted no change in the policy rate,” Kansas City Fed President Esther George said in her statement, adding maintaining interest rates would have been “appropriate.”
Both George and Rosengren had telegraphed their dissents ahead of the meeting. The presidents of the Cleveland, Philadelphia and Richmond Fed banks have also raised concerns about easing monetary policy ahead of this week’s meeting, but are not among the current set of voting members on the committee.
When asked about the two dissents at his press conference on Wednesday, Powell told reporters “there’s a range of views on the committee” about the prospects of the economy and the future of monetary policy.
The two “no” votes marked the most opposition at a policy-setting meeting since Powell took the reins in February 2018. The only other a dissent was in June by St. Louis Federal Reserve Bank President James Bullard, who wanted a cut then.
The Fed has left the door open for further rate cuts, while also suggesting that it has not entered an extended period of lowering rates.
It’s not rare for members of the seven-member Board and any of the 12 regional Fed presidents around the country to offer dissenting views on monetary policy, and Fed chairs – at least publicly – have embraced diversity of views as a tenet of policymaking.
When asked on Wednesday, Powell said he welcomed such debate, saying, “I won’t have it any other way.”
Members of the Federal Open Market Committee, comprised of the seven Board members and 12 regional Fed presidents, have dissented under both of Powell’s predecessors.
Powell’s predecessor Janet Yellen drew 22 votes in opposition across a total of 31 interest-rate setting policy meetings while she was chair and there were 58 dissents under Ben Bernanke’s chairmanship over the course of 65 meetings under Presidents George W. Bush and then President Barack Obama.