Kansas City Fed’s Esther George says July rate cut was not needed

Kansas City Fed's Esther George says July rate cut was not needed


Kansas City Federal Reserve President Esther George disagrees with the U.S. central bank’s move to cut interest rates last month as the economy is still strong.

“My sense was we’ve added accommodation and it wasn’t required in my view,” George told CNBC’s Steve Liesman in an interview that aired Thursday. “With this very low unemployment rate, with wages rising, with the inflation rate staying close to the Fed’s target, I think we’re in a good place relative to the mandates that we’re asked to achieve.”

Treasury yields ticked up after George’s comments aired.

The Fed cut interest rates by 25 basis points at its July meeting, citing “global developments ” and “muted inflation.” George, however, was one of two voting policymakers who voted to keep rates unchanged.

The U.S. central bank cut rates as China and the U.S. remain engaged in a trade war while economic activity outside of the U.S. slows down. These dynamics have raised worries about the U.S. falling into a recession.

George said in the interview she thinks risks are currently tilted to the downside. “As you look at global growth weakening and as you look at the amount of uncertainty associated with some of these trade issues, I think both of those are weighing on the outlook. Whether they spill over in a way that we see in the real economy is what I’m watching for.”

She added the ongoing trade war, which started last year, is impacting business investment in the U.S.

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