ALBANY, N.Y. (Reuters) – The U.S. economy is in a good place but the picture is more complex than positive data suggest, a Federal Reserve official said on Thursday in remarks that did not address whether he would support an interest-rate cut.
“While the current picture is complex, the economy is in a good place,” Federal Reserve Bank of New York President John Williams (NYSE:) said in remarks prepared for delivery at the University at Albany – State University of New York.
But Williams pointed to a number of signs that economic momentum may be slowing, including “that manufacturing production is in decline,” global growth and domestic job gains are slowing, and inflation below the central bank’s target may be negatively affecting people’s decisions when they spend and set prices.
“The headline data mask a more nuanced economic picture,” Williams said of the longest U.S. economic expansion on record.
Markets are widely expecting the Fed will cut rates when its policymakers gather for their next meeting on July 30-31. Fed Chairman Jerome Powell in congressional testimony this week seemed to set the stage for just such a move, highlighting persistent uncertainty in part due to the U.S.-China trade war and other issues that he suggested could point to a need for stimulus. Other policymakers have said the case for a cut is not clear cut. Williams has a vote on the committee that sets rates.
The Fed, which hiked rates four times last year, has kept its current benchmark overnight interest rate in a range of between 2.25% and 2.50% since December.
Williams said he still expects economic growth around 2.25% this year, a result that would be above what he thinks is the economy’s long-term potential. But resolving issues around the unevenness and distribution of that growth may be beyond monetary policy.
“Monetary policy is an important tool, but it alone cannot address all the economic issues that we face,” he said.
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