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Governor of the Federal Reserve Bank of Chicago: Fed rate cuts are expected to provide support for the manufacturing industry

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Update time : 2019-11-08 11:14:05
Core Tip: Charles Evans, president of the Federal Reserve Bank of Chicago, said in an interview with the American Foreign Relations Association on the 6th that with the Fed’s three interest rate cuts from the end of July, the US’s weak manufacturing forecast is expected. Will get support.

Xinhua Finance, New York, November 6 (Reporter Liu Yanan) Charles Evans, president of the Federal Reserve Bank of Chicago, said in an interview with the American Foreign Relations Association on the 6th that the Federal Reserve has cut interest rates three times since the end of July. Gradually, the weak US manufacturing industry is expected to be supported.

As one of the voting members of the Federal Open Market Committee, Evans said that the weakness of US manufacturing in recent months has not yet had a widespread impact on the US service industry. In addition, developments around trade policy and tariffs may also help the US manufacturing industry.

Evans said that the US manufacturing industry is weak, while other economic sectors are doing well, which seems unusual.

Evans said at the dialogue held by the American Foreign Relations Association that after three interest rate cuts, the US economy and US monetary policy are currently in good condition. From the perspective of risk management, the Fed has launched a "pretty" currency. Policy adjustments.

He said that the Fed does not have to continue to cut interest rates now. The latter monetary policy direction will depend on the data. The Fed will also attach great importance to inflation when formulating monetary policy.

Evans expects that the US neutral interest rate has dropped from the previous 2.75% to about 2%. The current 1.5% to 1.75% federal funds rate range is not far from the neutral interest rate. The current monetary policy is mildly loose. of.

The US Institute of Supply Management's US Manufacturing Purchasing Managers Index has been below 50 for three consecutive months from August to October this year, while the service industry, which accounts for about 90% of the US economic weight, is still in the expansion range. The weakness of the manufacturing industry will expand to the service industry, which in turn will undermine the overall performance of the US economy.

It is generally believed that the current decline in US manufacturing is mainly due to the uncertainty of US trade policy and the addition of tariff measures, which have a significant impact on corporate investment. The rise in product prices is putting pressure on new orders and employment.