A US interest rate cut will be implemented at the earliest in September, according to several prominent members of the Federal Reserve. These officials stand firmly behind Chairman Jerome Powell, much to the displeasure of US President Donald Trump, who wants rates lowered as soon as possible. BNR's in-house economist Han de Jong explains the rationale behind the Fed's stance.
De Jong describes the statements made by five different Fed officials yesterday as 'an explosion of communication.' While the messages varied slightly, the underlying theme was consistent: a rate cut is unlikely in the first two meetings, with September being the earliest realistic option.
Among the speakers were economic heavyweights like New York Fed President John Williams and Vice Chair Philip Jefferson. Four more Fed officials are scheduled to speak today about monetary policy.
De Jong understands the Fed's cautious approach, citing uncertainties from the trade war. While the short-term economic impact may be negative, the overall strong economy allows the Fed to wait. Meanwhile, Trump remains a vocal critic of Powell, but De Jong doubts any immediate policy changes even if Powell were replaced, as decisions are made by committee consensus.