January 6, 2020 — US Economy Resilient; Rates Expected to Remain Low

JANUARY 6, 2020 – US ECONOMY RESILIENT; RATES EXPECTED TO REMAIN LOW

Uncertainty in the global economy and, now, the rising of tensions in the Middle East, could influence the outlook ahead of the next FOMC meeting at month’s end. But the resiliency of the US economy, which continues to grow even when manufacturing is contracting a bit, was noted by the Cleveland Fed President on Friday. “Fundamentally the economy is sound,” said Loretta Mester on Bloomberg Television.  Chicago Fed President Charles Evans agrees.  Robert Kaplan, Dallas Fed President, still expects strong US consumer spending to drive 2-2.25 percent growth in 2020.

Unemployment is a half-century low, but inflation, stubbornly, is not rising above the Fed’s 2 percent target. Policymakers expect a tight job market to put upward pressure on consumer prices, but this has not been the case. Fed Chair Powell has expressed concerns about inflation readings.

The Fed Presidents are consistent on their call to keep rates low for long enough to push inflation above the Fed’s target in the upcoming year.

Leave a Reply

Your email address will not be published. Required fields are marked *