According to two Federal Reserve Chiefs, interest rates are unlikely to be cut in July. Federal Reserve Bank of Atlanta President Raphael Bostic told Bloomberg that he is “not seeing the storm clouds generating a storm yet,” while Thomas Barkin from the Richmond Fed said that with unemployment low and consumer spending, it’s “hard to make a case for stepping on the gas.’’
“From an employment perspective, the economy continues to perform in a very positive way,’’ Bostic said in Atlanta. “And inflation, the numbers I think are not as bleak as some others might suggest. For me, in terms of performing on our dual mandate, the aggregate numbers look pretty good.’’
“Inflation may well be closer to target than one might think,’’ Barkin said at a conference in Victor, Idaho. “I don’t see the current levels of inflation or inflation expectations as a trigger for additional accommodation.’’
Bostic and Barkin did not vote this year on the policy-setting Federal Open Market Committee (FOMC), and cited the Dallas Fed’s trimmed mean measure of inflation, which has also been highlighted by Fed Chairman Jerome Powell and has come in more consistently around 2% in recent months. The Fed’s dual mandate includes goals of maximum sustainable employment and price stability, which the central bank has defined with its 2% inflation target.
According to Powell, despite the positive economic indicators elsewhere, the homebuilding industry is feeling the pressure of high costs for labor and materials. Additionally, Powell notes that many workers who left the industry following the 2008 crash have yet to return.
“Now you have a shortage of skilled labor, so it’s hard to get people on the job, electricians, plumbers, carpenters and other people. No matter what you pay them, just finding people to do that work,” said Powell on CNBC.
Powell told Sen. Tina Smith that “What we hear from the homebuilders is that it’s a series of factors that are holding them back and challenging affordability.” This includes immigration policies and tariffs.