Fed’s Poole sees rate cut as unlikely

NEW YORK – “There would have to be a high hurdle for me to want to be cutting rates,” with inflation at its current level, “if the economy is only marginally and tentatively on the weak side,” William Poole, president of the St. Louis Federal Reserve Bank, told Bloomberg News after a speech in New York.
“Our economy is fundamentally sound,” Poole told the New York Chapter of the National Association for Business Economics. “Putting aside near-term uncertainties, mostly related to housing and housing finance, economic activity is growing at approximately the same rate as potential.” He did say, however, that the recession risk is “slightly elevated.”
The St. Louis Fed president voted last month, with all the other members of the Federal Open Market Committee, to leave the overnight funds rate unchanged at 5.25 percent.
Poole, 69, a former Brown University economics professor, focused on monetary policy in his speech, saying he long has favored an inflation target of 1.5 percent, plus or minus 0.5 percent, measured by the federal Personal Consumption Expenditures (PCE) price index, excluding food and energy. The index has been at or above the top of that range for three years.