The US economy is doing well and looks set to stay that way next year, two top Federal Reserve policymakers said on Friday, remarks that suggest they are content to leave interest rates where they are.
“I think the economy is in a good place. US Federal Reserve Vice Chair Richard Clarida said in an interview with Fox Business Network, adding that the consumer has never been in better shape. “We have the strongest labor market in 50 years, we have low and stable inflation, we have solid growth and our baseline outlook for the economy is more of the same in 2020.”
Speaking to students and faculty earlier in the day at the Borough of Manhattan Community College, New York Fed President John Williams summed it up this way: “The economy is performing about as well as we have seen in decades.”
Williams and Clarida work closely with Fed Chair Jerome Powell, who on Wednesday announced the US central bank’s well-telegraphed decision to hold interest rates steady in a range of 1.5 percent to 1.75 percent, and signaled borrowing costs would remain there for the foreseeable future.
The Fed cut rates three times from July to October in a mini-easing cycle, designed to sustain the US economic expansion amid slowing global growth and a drop in business investment caused by uncertainty amid the 17-month long US-China trade war.
On Friday the world’s two largest economies announcing a Phase 1 agreement that reduces some US tariffs in exchange for increased Chinese purchases of American farm goods.
“Any resolution of that uncertainty, assuming it’s a good deal, is obviously a positive for the economic outlook,” Clarida said. He added, though, that trade was just a number of risks the Fed will monitor.
“This is obviously a negotiation; it looks like it’s going in a positive direction,” Clarida said.
“But … global developments more broadly have been something we’ve been monitoring.
You’ve had a global slowdown this year, emerging markets have been slowing down, there are muted inflation pressures. So it’s not just any one thing that we are focusing on.” – Reuters