Central banks should move quickly to address economic pains when interest rates are already low, the president of the New York Federal Reserve Bank has said; Fed Chairman Jerome Powell, pictured in June 2019, has said many central bankers feel the case for a rate cut has “strengthened” (NICHOLAS KAMM)

New York (AFP) – Central banks should move quickly to address economic pains when interest rates are already low, the president of the New York Federal Reserve Bank said Thursday.

Wall Street took the remarks by John Williams — the influential vice chairman of Federal Reserve’s monetary policy committee — as another sign the Fed is prepared to cut the benchmark lending rate later this month as insurance against an economic slowdown.

Williams said studies suggested that when monetary policy is already easy, central banks should “move more quickly than you otherwise might” rather than waiting “for disaster to unfold.”

When rates are higher, “one can afford to move slowly and take a ‘wait and see’ approach,” he said in a speech to a meeting of economic researchers, 

“When you only have so much stimulus at your disposal, it pays to act quickly to lower rates at the first sign of economic distress.”

With interest rates still low in major economies, economists worry central banks like the Fed may not have much firepower to respond to slowing growth.

The Fed raised the key policy lending rate four times last year, but amid signs of a slowing economy amid rising global trade tensions, is expected to cut the rate at the July 30-31 meeting, the first easing move in a decade.

Following Williams’ remarks, the benchmark Dow Jones Industrial Average turned positive and was up 0.1 percent around 1900 GMT after trading in the red earlier in the day. 

Disclaimer: Validity of the above story is for 7 Days from original date of publishing. Source: AFP.