Fed Vice Chair Richard Clarida said “the current economic expansion almost certainly will become the longest on record”. But ” incoming data have revealed signs that U.S. economic growth is slowing somewhat from 2018’s robust pace”. Also, “prospects for foreign economic growth have been marked down, and important international risks, such as Brexit, remain.” On inflation, core PCE, a “better gauge of underlying inflation pressures”, has been muted. And, “some indicators of longer-term inflation expectations remain at the low end of a range” of price-stability.
Clarida reiterated that federal funds rate is now “in the broad range of estimates of neutral”. The baseline economic projections see growth in 2019 “running somewhat above” trend and core PCE inflation remains near 2%. Thus, Fed “can be patient as we assess what adjustments, if any, will be appropriate to the stance of monetary policy.
