Sluggish inflation gives the Federal Reserve the leeway to keep borrowing costs ...
BERKELEY, Calif. - Sluggish inflation gives the Federal Reserve the leeway to keep borrowing costs low and help draw more workers into the labor market, San Francisco Federal Reserve Bank President Mary Daly said on Saturday.
The Fed last month lowered interest rates for the third time this year, to a range of 1.5% to 1.75%. Fed Chair Jerome Powell has described the rate cuts as an insurance policy against the drag from slowing global growth and geopolitical and trade uncertainty. The rate reductions are also a bid to counter inflation that has remained stubbornly below the Fed’s 2% goal.
Daly on Saturday did not speak directly about the Fed’s recent rate cuts. But, she said, there is little evidence that low rates are creating costly imbalances in financial markets, a worry voiced by some Fed policymakers who have opposed the rate cuts. By contrast, she argued, low rates do appear to be delivering some benefits, improving among other things hiring prospects for African Americans and Latinos, who typically have higher unemployment rates than whites.
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