As Federal Reserve Chair Jerome Powell kept the focus Thursday on global risks that could trigger a Fed rate cut in coming weeks, his colleagues from regional Fed districts painted a rosier picture of continued USA economic growth and a solid business outlook.
Though the outlook for economic growth is "solid", boosted by consumer spending, business spending has been "lackluster" and sentiment has been soft, Brainard said.
With investors in contracts linked to the Fed's targeted overnight lending rate putting the probability of a rate reduction at close to 100 per cent, "it would be unprecedented for the Fed to not cut", Lavorgna wrote. But resolving issues around the unevenness and distribution of that growth may be beyond monetary policy. "Of course, my judgment about the actual path of policy will continue to be influenced by the evolution of the data and the risks". The New York-based central banker has a vote on the committee that sets rates. Fed Chair Jerome Powell, in testimony on Capitol Hill this week, fed that narrative with promises to "act as appropriate" amid rising trade tensions between the United States and its biggest trading partners that is sapping business confidence.
Williams' remarks represent a sharp shift from his assessment in May, when he was asked whether a rate cut was needed to support inflation.
In prepared remarks released before the hearing, Powell contrasted the Fed's "baseline outlook" of continued US growth against a considerable set of risks - including persistently weak inflation, a slowdown in other major economies, and a downturn in business investment driven by trade risks.
With the Fed's current preferred measure of inflation running at 1.6%, below the 2% target, some policymakers argue the central bank needs to do more or risk losing public trust that it takes the target seriously.
"Some participants also noted that the continued shortfall in inflation risked a softening of inflation expectations that could slow the sustained return of inflation" to the central bank's 2 percent target, the minutes showed.
"If the public comes to believe that a persistent downside miss to the 2% goal means the FOMC is not committed to that goal, then there is a problem", Bostic said.