RICHMOND, June 14 - Despite the dramatic slowdown in the U.S. economy, the outlook is "very bright," Federal Reserve Bank of Richmond President Alfred Broaddus said on Thursday.
"We at the Fed had wanted growth to moderate somewhat, and as things turned out it's moderated more than we expected or wanted," Broaddus said in a speech prepared for the Virginia Housing Coalition. "Despite the current slowdown however, intermediate and longer-term prospects for the U.S. economy are still very bright," he said.
His remarks follow less optimistic comments by Federal Reserve Vice Chairman Roger Ferguson, who said on Wednesday the U.S. economy likely will get worse before it gets better. "It is my sense that we have not yet reached bottom or at the least it is too early to declare we have reached bottom," Ferguson told the Senate Banking Committee.
Ferguson's remarks, coupled with a bleak regional survey from the Fed, boosted optimism that the central bank would make further interest rate cuts. His comments came two weeks before the Fed next meets to discuss the future course of U.S. interest rates. The Fed has slashed rates five times this year by an aggressive half-percentage point each time, bringing the key fed funds rate to 4.0 percent, the lowest level in seven years.
The Fed is widely expected to cut rates again at its next meeting, but most analysts believe it will take its foot off the gas a bit and reduce them by a quarter percentage point.