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Donald Trump's prices are “likely” to endanger the objectives of the federal reserve to maintain prices and unemployment in control, warned President Jay Powell, while emphasizing the accent put by the American central bank on inflation.
The FED chief said on Wednesday: “The Administration (Trump) implements important policy changes and in particular trade is now the emphasis. The effects of this are likely to move away from our objectives.”
While the United States at a rate would aim to “balance” its maintenance objectives inflation Almost 2% and maximizing employment, they should remember that “without price stability, we cannot reach long periods of high labor market conditions”, said Powell in the remarks of the Chicago economic club.
Powell also said that the president price So far, announced had been “much larger than expected”, adding that “the same thing was probably true for economic effects, which will include higher inflation and slower growth”.
American shares extended a sale which started earlier Wednesday as the Fed chair maintained, the S&P 500 ending the day down 2.2%.
European and Asian actions were mixed on Thursday, with a CSI 300 dish from China and a Topix from Japan up 1.3%. The Stoxx Europe 600 fell 0.1% and the FTSE 100 was 0.6% lower at the start of negotiations.
Powell said Trump's prices could place us rates sets “in the difficult scenario in which our double -compressed objectives are in tension”.
“If that were to happen, we would consider how far the economy is from each objective and the potentially different time horizons on which these respective shortcomings should fill,” said Powell.
Several FED officials – including John Williams, New York Fed leader, and Governor Christopher Waller – have said that inflation should increase in the coming months in the rear of the administration.
While Waller thinks that the impact of prices will prove to be uncovered, other members of the Federal Market Open Market Committee which, according to Powell chairs, think that Trump prices have increased the chances that inflation is a longer problem for American consumers.
Trump has repeatedly called on the Fed to reduce interest rates, displaying its social platform Truth last month that officials should act as “American prices begin to pass (ease!) The path of the economy”.
The Personal Consumer Consumption Consumer Consumer Consumering index increased at an annual rate of 2.5% in February, above the central bank target.
Recent surveys have shown that consumers and businesses expect a sharp increase in prices in the near future, because new import taxes are going to the economy.
The Trump administration policies have placed the Fed in “Wait and See” mode, after the FOMC made a series of cuts during the second half of last year.
The American central bank has retained its target range of the Federal Funds for reference to 4.25 to 4.5% this year, the officials claiming that they are well placed to respond once the economic data show the effects of the president's policies on American companies and households.
