Dissent among Fed members grows as hard data and expectations paint different pictures

Lail Brainard, an authoritative member of the rate-setting Fed panel, voiced support on Thursday for lower interest rates to protect the economy from risks associated with low inflation and trade uncertainty and global growth.
Despite the fact that the outlook for economic growth driven by consumer spending were “good,” business spending was “dull,” and sentiments were weak, Brainard said. According to her, if inflation too long remains below the target of 2%, then this can fix lower inflation expectations in the future and make it difficult for the Fed to effectively support the economy by lowering interest rates when necessary.
“Considering the downside risks at a time when inflation is low, I would favor easing the expected monetary policy trajectory in accordance with the basic principles of risk management,” Brainard told participants at the Community Bankers Roundtable in Scranton, state Pennsylvania.
“Of course, my judgment on the actual course of the policy will continue to be affected by changes in data and risks.”
Some politicians at the Fed’s regional banks, including Patrick Harker, president of the Federal Reserve Bank of Philadelphia, who accepted Brainard on Thursday, did not support lower interest rates, citing unemployment at a 50-year low and inflation, which, although lower than the target of 2% but showed signs of acceleration in June.
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