The US central bank cut interest rates on Wednesday, lowering the target for its benchmark rate by a quarter point, to a range of 1.5% to 1.75%. The move was the third cut in four months.
Federal Reserve Chair Jerome Powell (pictured) implied the bank would hold off on further cuts.
Diane Swonk, chief economist at Grant Thornton, told BBC Radio 4's Today Programme that she wanted the Fed to resist a rate cut.
An adviser to the Fed, she said: “When you’re at these lower levels of rates you have to be much more strategic in holding your power dry for when you need it most. Although financial markets wanted a rate cut its not clear from the economic data nor from the at least temporary detente [in] the US trade war between China and the US that we need the rate cut at the moment, given we’ve got so little to go before we get back to zero my preference would that they hold off",
Is the Fed independent, given that the US President Donald Trump has been calling on the central bank to cut rates?
"The Federal Reserve pretty much tones out what the president says at this point in time…[They are] wearing noise-cancelling head phones when it comes to the presidential tweets. They can’t help but disappoint the president…. What I do worry about, is even though I know the Fed is not responding only to the president, many people in the market are now reading this as a capitulation to the president".
There is a risk that "perception becomes reality” which is one of the reasons she thinks that the Fed should have held rates.