The new policy under Trump’s government puts the US economy in “extraordinary flux,” said Federal Reserve Bank President Atlanta Raphael Bostic on Thursday, and he suggested that it was impossible that Fed would have sufficient clarity to move with interest rates before the end of spring or summer.
“There are many transitions that occur, and in the middle of this transition it is difficult to know exactly where things will land,” Bostic said at an event organized by Birmingham Business Journal. He marks a list that includes tariffs, trade policies, unexpected bouncing in inflation, consumer sentiment that changes to negative, immigration policies and their impact on the labor force, energy policy, tax policy, federal and geopolitical expenditure.
“I will be surprised if we get a lot of clarity before the end of spring or to summer,” he said. “We must really be patient.”
Federal Reserve will hold a meeting to determine the next policy on March 18-19. Policy makers are expected to save short -term loan costs in the range of 4.25% -4.50% at this time.
President Donald Trump, since the inauguration of January, has introduced a series of tariff actions followed by some rollbacks or suspension of sentences that have industrial markets and financial markets and contribute to financial market bets in previous and additional Fed interest rates.
Futures Contracts Interest rates now provide prices in a better opportunity than even that the Fed will continue to cut our short -term loan costs in May, with two more reductions to be followed this year. Fed officials at the end of last year have project only two interest rates this year.
Bostic said the tariff will mean a higher price at several points for American households, which have struggled at a high cost, even if that means higher inflation “is an open question.”
Other policies under new government, such as deregulation and energy production, triggered business optimism, he said.
After the level of deduction of Fed with a full percentage point last year, Bostic said he began this year thinking that he would need time to assess the economic situation before supporting further action.
“If I wait in advance to see and get a clear signal about where the economy will go, I will definitely wait now, because the direction is very much in the air,” Bostic said. “The question is, how are this all sorted? And what is the order of things launched? What is the response? Then how does everything increase? “
Source: Reuters
