Federal Reserve Bank of Dallas President Lorie Logan on May 29 indicated that the United States central bank may need to keep short-term interest steady as it awaits data showing the impact of President Donald Trump’s policies, Reuters reported.
She said that the Fed rate could stay “where they are for quite some time”, as the bank waits for the data to show if Donald Trump’s mix of trade, tax and regulatory policies pushes up inflation or down on employment.
The Fed earlier this month left its policy rate in the 4.25-4.50 per cent range.
What Fed’s Lorie Logan said
“For now, with the labor market holding strong, inflation trending gradually back to target, and risks to the (Fed’s) objectives roughly balanced, I believe monetary policy is in a good place. It could take quite some time to know whether the balance of risks is shifting in one direction or another,” Logan said at an event in Waco, Texas.
If the balance does shift, she added, “We’ll be well prepared to respond.”
Logan is only the latest in a string of policymakers including Fed Chair Jerome Powell to say that it’s too early to know whether Trump’s aggressive tariffs will push up inflation only temporarily or more persistently, or if the tariffs could reduce employment in some import-dependent sectors.
“Stimulative federal fiscal policy or changes in regulations could also boost investment and consumer demand. On the other hand, economic uncertainty and financial market volatility could prompt consumers and businesses to pull back, slowing the economy,” she added.
(With inputs from Reuters)