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Fed governor sees no need to cut rates again
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Federal Reserve Governor Randall Kroszner said policymakers probably won't need to reduce interest rates further to help the economy weather a "rough patch" in the coming year.
"The current stance of monetary policy should help the economy get through the rough patch during the next year, with growth then likely to return to its longer-run sustainable rate," Kroszner said Friday during a speech in New York. Data consistent with such growth "would not, by themselves, suggest to me that the current stance of monetary policy is inappropriate."
The comments represent the most explicit message from a Fed policymaker since the Oct. 31 rate cut that the central bank is reluctant to further lower borrowing costs. The view among officials is in conflict with investor expectations, as futures prices on the Chicago Board of Trade suggest an 84 percent chance of a quarter-point cut at the Dec. 11 meeting.
"What you got from Kroszner is clearly a message that he's not thinking the way we are," said J.P. Morgan Chase & Co. chief economist Bruce Kasman, who on Thursday forecast a rate cut next month, altering his prediction.
"Our best guess is that they'll make a change and ease, but I think it's a very close call."
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