The U.S. economy is in a favorable place at the moment, but the Federal Reserve is monitoring several "crosscurrents" that are leading to slower growth, New York Fed President John Williams said Oct. 2.
The outlook is "much more mixed" when looking into the future, Williams said, noting that growth has slowed in Europe and China, trade uncertainty has continued, and geopolitical factors like Brexit and political upheaval in Hong Kong pose risks to global growth.
"Looking at where we are today, things I think are [in a] very favorable place," Williams said, adding that there are "a lot of uncertainties and risks out there that we need to be navigating."
The Fed has lowered its benchmark interest rate twice this year, largely due to concerns about weaker growth, and investors have looked for clues over whether another rate cut might be in store in October or December.
Williams provided little guidance on whether he might favor more rate cuts, saying officials want to position their benchmark rate so that the economy stays "roughly where it is," with continued growth in GDP and the labor market and inflation around the Fed's 2% goal.
Fed officials are divided over their next move, with some favoring more interest rate reductions and others cautioning against loosening monetary policy.
Futures markets, though, largely expect the Fed to ease rates again this year. As of 1:22 p.m. ET, the CME Group's FedWatch tool showed an 89.5% probability that the Fed will cut rates at least once more this year, compared to a 10.5% chance that rates will stay flat.
Chicago Fed President Charles Evans, who voted for the Fed's two rate cuts this year, told CNBC on Oct. 1 that the Fed "might need to do more" if risks to the economy increase, but he did not explicitly call for more easing.
Separately, Richmond Fed President Thomas Barkin told Fox Business on Oct. 2 that there is "a lot of time" until the Fed's next meetings, scheduled for Oct. 29-30 and Dec. 10-11, and Fed officials will be monitoring the effects of their easing and what incoming data reveal about where the economy is headed.
"At least for me, my posture is very balanced," he said. "I'm looking at the data on the economy, and I'm looking at the data on uncertainty."
Consumer spending has remained a point of strength for the U.S. economy, and inflation appears to be picking up toward 2%, but business investment "has been flat for most of the year" as uncertainty takes a toll on firms' confidence levels.
"They're having trouble deciding how to invest without that certainty," Barkin told FOX Business.
Barkin does not vote on the rate-setting Federal Open Market Committee this year but will rotate into a voting spot in 2021.
