Fed Vice Chair Richard Clarida said in a Bloomberg interview that he saw higher uncertainty in the last six to eight weeks. But he still expects economic expansion to continue. He noted “the economy’s baseline outlook is good” with “sustained growth, a strong labor market and inflation near our objective”.
However, he also acknowledged “there was broad agreement around the table that the case for providing more accommodation has increased”. And, he said Fed has “the tools necessary to sustain expansion, a strong labor market and stable prices, and as appropriate we will deploy those tools to achieve those goals.”
St. Louis Fed President James Bullard dissent in this week’s FOMC decisions to keep interest rate unchanged at 2.25-2.50%. He said today that “inflation measures have declined substantially since the end of last year and are presently running some 40 to 50 basis points below the FOMC’s 2% inflation target”.
Bullard added, “I believe that lowering the target range for the federal funds rate at this time would provide insurance against further declines in expected inflation and a slowing economy subject to elevated downside risks.”
