Monday , March 8 2021

A ffse officer encourages a caution in rising rates

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Feeding officers would scrutinize potential signs of inflation and changes in the labor market before making any decision.

Photo: AFP / VNA / CVN

"A financial policy strategy must find a way of combining data in the future and a model of the economy with a healthy ruling dose – and moisture! – to shape and convey interest rate policy (in line with) our goals"Vice President of the Richard Clarida Federation said at a conference in New York.

Based on previous experience and latest economic data, it's recommended "a gradual normalization policy to the extent to which it will allow the Fed" to build up more information for future decisions.

He also estimated that interest rates were "closer" the neutral rate, ideal level (probably near 3%, according to experts) that does not restrict or stimulate the economy.

"As far as there is a matter of opinion, there is a range of views within the FOMC"Central Bank Financial Committee, admitted.

"The fundamentals of the US economy are sound (…) Private sector prospects for the whole year (…) suggests that growth should be 3% or slightly more "insisted Richard Clarida.

If confirmed, the 2018 growth would be the fastest in the current expansion cycle, which came into the tenth year last July. "Yes, as I should expect, economic growth will continue in 2019, this will be the longest American historian in history.", he also noted.

Richard Clarida seems to have improved his position since then in a speech in late October, then he estimated even after three increases in this year's rate, the Fed's rate rate (2.25%) interest rate policy would again stimulate the economy. .

And, Fed's chairman, Jerome Powell, had stressed for his part that the Fed was not far from returning to a level that would no longer be energy-efficient.

But in the face of the instability of financial markets in recent weeks, which has already been shaded by Donald Trump trade traditions, officials now seem to adopt a more careful perspective.

Tuesday, November 27, Richard Clarida has highlighted the difficult equation: rising rates can quickly reduce economic expansion; raising them too slowly could accelerate inflation, which could jeopardize financial stability.

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