Fed Officials Express Optimism About Receding Trade Tensions and Their Effect on US Economic Growth

Fed Officials Express Optimism About Receding Trade Tensions and Their Effect on US Economic Growth

Posted Friday, January 10, 2020 by
Arslan Butt • 1 min read

Fed policymakers are turning cautiously optimistic about the receding trade tensions and their positive impact on the US economy in the near future. Fed officials express hope that the upcoming phase one deal between the US and China and the ratification of the USMCA trade agreement could boost economic growth in the US in 2020.

St. Louis Fed President James Bullard, Fed Vice Chair Richard Clarida and Chicago Fed President Charles Evans were among the officials who made such statements in their speeches recently. While the partial trade deal may not fully resolve the trade war between the US and China, it is a step in the right direction, and could encourage growth and business investment this year.

In a speech at a forum in New York, Clarida stated, “There are some indications that headwinds to global growth may be beginning to abate”. He also talked about the Fed’s decision to cut interest rates thrice in 2018 and how this move has helped support economic growth in the US.

These comments support the Fed’s view of keeping interest rates on hold for some time to come, following the three rate cuts that took place late last year. Chicago Fed President Evans has already hinted hat the Fed could hold interest rates steady between 1.50% and 1.75% for 2020.

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