By Howard Schneider and Ann Sapphir
Palo Alto, California (Reuters) – The federal reserve needs more time to see how the economy reacts to the price and other policies of the American president Donald Trump before determining the correct answer, the president of the Cleveland Federal Reserve, Beth Hammack, said on Friday, noting that a large part of the administration of the administration remains uncertain.
“I am ready to move each time we have clear and convincing evidence, but … given the overall extent of the policies that have been discussed and put in place, I think there is a real question about what these impacts will look like, and therefore it can take more time,” said Hammack.
“There is not many data by June”, when the Fed then meets to set interest rates, she said in an interview on the sidelines of a conference on monetary policy at the Hoover institution of the University of Stanford in which it developed the current Fed dilemma.
Although the latest data has shown that the American economy contracts at an annualized rate of 0.3% in the last quarter, for example, most analysts estimate that this is not a clear signal of economic orientation due to distortions drawn by commercial policy; For Hammack, the economy has been resilient and the jury is still on its future course.
“Everything is premature for me-I think everything is very fluid and I think we really have to wait and see how the data are going,” she said.
Likewise, she and her political comrades noted the labor market strength, where the unemployment rate is at a low level of 4.2%, but also recognize the risks while businesses are starting to think about the benefits of new tariff policies. If the impact of price lifting prices is limited and the economy is weakening, “we would really like to focus on the side of the employment of our mandate,” she said.
The Fed this week left short -term interest rates in the range of 4.25% to 4.5%, where they have been in since December. While the prices increase the risk of higher inflation and higher unemployment, said the president of the Fed, Jerome Powell, it is not yet clear by how much, or for how long, or in what order, and with the current trade negotiations and the complete scope of unknown levies, it is too early to know how the Fed should react.
Contacts in the Hammack district are emergency plans to reduce their workforce if the request is weakening, she said.
But for the moment, companies are working on their workers after years having trouble hiring, she said. “People do not know in which direction it will be settled,” she said.
