Federal Reserve Bank of Dallas President Robert Kaplan pushed for a pause in interest rate hikes by the U.S. central bank in 2019 amid uncertainties about global growth and tighter financial conditions.
“We should not take any further action on interest rates until these issues are resolved, for better, for worse,” Kaplan told Bloomberg. “So I would be an advocate of taking no action and -- for example -- in the first couple of quarters this year, if you asked me my base case, my base case would be take no action at all.”
The Dallas Fed chair -- who said he carefully watches the markets, which just experienced the worst rout since the Great Depression -- noted “three big issues” in the economy and the markets: decelerating global growth, weakness in interest-sensitive and economically sensitive industries and tighter financial conditions, according to Bloomberg.
“I think those three issues -- I’m sure -- are affecting the markets, but they’re also affecting my thinking about monetary policy. It’s going to take some time so see the depth and breadth of those three issues,” he said.
Policymakers at the Federal Reserve voted in December to raise short-term interest rates for the fourth time in 2018, despite pressure from President Trump to do otherwise. They signaled a slower pace of gradual rate hikes in 2019.
"There's a fairly high degree of uncertainty," Fed Chair Jerome Powell said about the future of further rate hikes during his quarterly press briefing. He noted, however, that rates have arrived effectively at the lower-end range of neutral.
Although still low by historical standards, this latest hike put interest rates at the highest level in nearly a decade. It marks the ninth time the Fed has raised interest rates since 2015. Higher rates can affect consumers by increasing borrowing costs, like auto loan rates and the 30-year-fixed mortgage rates.