By MICHAEL S. DERBY
The first wave of Federal Reserve officials to weigh in after this week’s policy meeting reiterated on Friday that the current economic uncertainty calls for monetary policy patience as Trump administration trade policy boosts risks to the outlook.
When it comes to the current state of Fed policy, “we’re in a good place,” New York Fed President John Williams said in an interview with Bloomberg Television. Declining to speculate where monetary policy will go amid the uncertainty, he said, “let’s collect more data, information about what’s happening with trade policy” and its impact on the economy and then decide what that means for the Fed’s next policy steps.
Fed Governor Adriana Kugler, who spoke in a separate Bloomberg Television interview, said the healthy economy “gives us time” to make more progress lowering inflation pressures before needing to consider a next step. Both Williams and Kugler described the current state of interest rate policy as placing a modest amount of restraint on economic activity.
The US central bank held its benchmark interest rate steady in the 4.25 percent-4.50 percent range on Wednesday and flagged the rising economic uncertainty.
Speaking in a press conference after the end of the two-day policy meeting, Fed Chair Jerome Powell said, “despite heightened uncertainty, the economy is still in a solid position,” adding “we believe that the current stance of monetary policy leaves us well positioned to respond in a timely way to potential economic developments.”
President Donald Trump’s trade policy is the key source of uncertainty for the Fed and broader economy. In a bid to bring back more manufacturing to the US, Trump has slammed nations around the world, particularly China, with very high tariffs. – Reuters
