US Fed minutes show bankers debated cutting interest rates more aggressively
The US Federal Reserve debated cutting interest rates more aggressively at its last meeting amid concerns about a global economic slowdown and trade tensions.
The Fed cut rates by 25 basis points at its 30-31 July meeting, with minutes published today showing central bankers were keen to avoid the appearance of being on the path to more cuts.
However, two participants called for a greater cut of 50 basis points.
“A couple of participants indicated that they would have preferred a 50 basis point cut,” the minutes said, with policymakers in favour of such a move worried that inflation was too low.
Read more: US stock markets rise as Federal Reserve enters spotlight
At the same time, the central bankers were united in the desire not to suggest they were heading for more cuts.
“Participants generally favoured an approach in which policy would be guided by incoming information … and that avoided any appearance of following a preset course,” the minutes said.
Market reaction to the publication of the minutes was muted with US stocks holding earlier gains.
Fed chair Jerome Powell is set to give a closely watched speech on challenges for monetary policy at an annual meeting of central bankers in Jackson Hole, Wyoming on Friday
In July, the Fed cut rates for the first time since the financial crisis, lowering its main federal funds target rate by 25 basis points (0.25 percentage points) to between two and 2.25 per cent, making borrowing cheaper in the world’s largest economy.
US President Donald Trump has called for far greater cuts, despite a convention that the president does not comment on the actions of the Fed.
Read more: Fed cuts interest rates by a quarter point
This evening, before the release of the Fed minutes, he tweeted that Powell was “like a golfer who can’t putt”.
“Big US growth if he does the right thing, BIG CUT – but don’t count on him! So far he has called it wrong, and only let us down.
“We are competing with many countries that have a far lower interest rate, and we should be lower than them. Yesterday, ‘highest Dollar in US History.’ No inflation. Wake up Federal Reserve. Such growth potential, almost like never before!”