Speaking in NY
The Fed's Harker is also speaking in NY and is at odds with the President's remarks for the Fed to continue to ease rates. He says:
- He was a against the October rate cut
- Fed should hold rates steady and see how the economy evolves
- We may be at full employment but we really don't know
- at this point if we lower rates we won't get the response we think because cost of capital is not holding businesses back
- right now not for raising rates, or for lowering. Let's see how things play out
- not worried by being little under inflation goal
- would be worried if inflation expectations slipped
- monetary policy is about neutral or slightly accommodative
- in the case of recession the best response may not be negative rates but bigger fiscal stimulus
- bringing rates 0 and asset purchases would be the 1st line of defense
