Fed Vice Chair Richard Clarida attended a Dallas Fed event on Global Perspectives, with Dallas Fed President Robert Kaplan. There Clarida said that “the U.S. economy is in a good place right now….It’s a good situation to be in, and we really want to do whatever we can to help support and maintain the economy.”
Clarida also noted that slowdown in Asia and Europe are “definitely a relevant factor” to Fed policy. Since other central banks are still having interest rates stuck in crisis-fighting mode, “that obviously, on balance, makes the global economy more fragile.” He also tried to talk down the implication of yield curve inversion. He said “you can’t be handcuffed” to financial market signals . There are factors like global demand for US treasuries that pushes yields down at the long end.
Kaplan indicated that “you want to run maybe a little hotter, but you don’t want to go too far.” And, since “inflation is not running away from us”, Fed “might have the luxury of trying to do more to get more people into this workforce on a sustainable basis …”