trending Market Intelligence /marketintelligence/en/news-insights/trending/QJCTtQl0B2DuOkgc2xXjQA2 content esgSubNav
In This List

Kansas City Fed President George rejects low inflation as basis for rate cuts

Blog

Using ESG Analysis to Support a Sustainable Future

Podcast

Street Talk Episode 87

Blog

A New Dawn for European Bank M&A Top 5 Trends

Blog

Insight Weekly: US banks' loan growth; record share buybacks; utility M&A outlook


Kansas City Fed President George rejects low inflation as basis for rate cuts

The current stretch of low inflation is, by itself, not a reason to ease monetary policy, Kansas City Federal Reserve President Esther George said Oct. 6, according to Reuters.

Inflation data that has consistently registered below the Fed's 2% target has been cited by other Fed officials as a key factor behind the central bank's recent reductions in the federal funds rate.

But George, speaking during an appearance in Denver, said that deviations of as much as 100 basis points from the Fed's long-run target should be tolerated, "depending on broader economic conditions," Reuters reported. She said at present, low inflation is largely being driven by global forces that the Fed cannot effectively counter and that the U.S. economy is fundamentally healthy.

George opposed the Fed's cuts in July and September, joining Boston Fed President Eric Rosengren in dissenting against the moves. Markets anticipate that the Fed will cut rates again at its Oct. 29-30 policy meeting to defend against the risk that weakness in manufacturing and business investment will spread to the rest of the economy. A mixed employment report Oct. 4 did little to alter expectations.

George warned that easing policy in the absence of a broad downturn could produce financial imbalances and a misallocation of resources, according to Reuters. She said she would reconsider her stance if economic readings worsen substantially and that she will be on the lookout to see whether upcoming tariffs on consumer goods undermine confidence.

Separately, Fed Chairman Jerome Powell delivered introductory remarks in Salt Lake City before a screening of a documentary film about Marriner Eccles, who was the Fed's chairman from 1934 to 1948.

Eccles "is responsible more than any other person for the fact that the United States today has an independent central bank — a central bank able to make decisions in the long-term best interest of the economy, without regard to the political pressures of the moment," Powell said, according to prepared remarks.

In public statements, U.S. President Donald Trump has repeatedly pressured the Fed to lower rates, and he has criticized Powell and the Fed in multiple Twitter posts.