FOMC

Monetary policy may not be the answer for what ails the economy, Federal Reserve Bank of Kansas City President Esther George said Friday.

While the economy continues to expand “at a slight to modest pace,” those surveyed lowered their outlooks for growth over the coming year, according to the Fed's Beige Book.

With talk of a possible mini deal on trade with China and the Federal Reserve announcing it will buy about $60 billion of Treasury bills each month to build its reserves, the 10-year Treasury note was yielding more than three-month bills on Friday for the first time since July.

Part of the problem could be “the apparent failure of mainstream economic models to capture fully the current reality.”

The minutes from the latest Federal Open Market Committee’s policy-setting meeting highlighted some disagreements between members.

The producer price index saw its largest monthly drop in four years.

The U.S. economy’s loss of momentum isn’t severe enough to warrant a further reduction to interest rates, two hawkish Federal Reserve board members said.

There are ways to promote the Federal Reserve’s independence, but it would require changes to the current system, which is based on a “fuzzy mandate,” according to members of the Shadow Open Market Committee.

Not all of the threats and challenges to the Federal Reserve’s independence and credibility are external, according to former Federal Reserve Bank of Philadelphia President Charles Plosser.

The economy is doing well and the Federal Reserve should hold rates for now, Federal Reserve Bank of Philadelphia President Patrick Harker said Friday.