You are here: Home » Reuters » News
Business Standard

Despite trade worries, Fed officials see risks as little changed

Reuters  |  WASHINGTON 

By Jason Lange

(Reuters) - The is worried about trade tensions with China, but newly released details on policymakers' views suggest those concerns have not translated into concerns about the overall economy.

On the one hand, a "strong majority" of policymakers saw a potentially looming trade war as a "downside risk" for the U.S. economy, according to the minutes of the Fed's March 20-21 meeting released on Wednesday.

But another section of those same minutes showed there had been essentially no change in the number of Fed policymakers flagging elevated risks to economic growth.

Fourteen of the Fed's 15 policymakers in March considered uncertainty about growth to be "broadly similar" to that seen in normal times, unchanged from their assessment in December.

Only one policymaker saw higher-than-normal levels of uncertainty, down from two in December, when the Fed had 16 policymakers.

And the section of the minutes on risks and uncertainty shows that only one policymaker considers it more likely that future economic growth will be below current forecasts than above them.

"I guess they don't really see trade -- and all these factors combined -- as that huge of a risk," said Michael Feroli, an at and a former Fed staffer.

Trade tensions between the and were heating up in the weeks prior to the Fed's March policy meeting, and have grown more acute since then.

set stiff tariffs on many and aluminium imports on March 7, which criticized, saying they would have a "serious impact" on trade.

The relationship between the world's two largest economies grew especially strained after the Fed's last meeting, with rising tariffs on U.S. aluminium exports on March 23.

In recent weeks, both sides have threatened to levy higher import taxes on tens of billions of dollars in additional goods, though there have also been some signs of easing tensions. U.S. on Sunday predicted would take down its trade barriers, while Chinese officials have said this is not the time for negotiations. Two days later, Chinese promised to further open the country's economy and lower tariffs on certain products, though the country's on Wednesday said that pledge was unrelated to the trade tensions with the

Fed Jerome Powell, who took the helm at the central in early February when Janet Yellen's term ended, said on Friday that the Fed saw risks to the economy as "roughly balanced."

The details released on Wednesday showed more Fed policymakers believe inflation could well be higher than they currently expect. In December, two policymakers thought that inflation was more likely to be lower than expected and two thought higher than expected was more likely.

But in March, three policymakers considered inflation poised to potentially outperform forecasts while none saw underperformance as more likely.

(Reporting by Jason Lange; Editing by Leslie Adler)

(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)

First Published: Thu, April 12 2018. 02:24 IST