UPDATED 12:52 PM PT — Tuesday, June 4, 2019
According to Federal Reserve chairman Jerome Powell, the Central Bank is monitoring the possible economic impact of trade disputes with China and Mexico.
During a speech in Chicago today Tuesday, Powell said the Fed is maintaining its data dependent approach to monetary policy. The fed chair also highlighted the continued strength in the labor market with record low unemployment and stable inflation.
Inflation has still remained under the bank’s target for two-percent, which is something some experts believe will force a rate cut in the near future. Powell said the Fed is closely watching the inflation shortfall.
“We are closely monitoring the implications of these developments for the U.S. economic outlook and, as always, we will act as appropriate to sustain the expansion with a strong labor market and inflation near our symmetric two-percent objective,” he stated.
Chicago Fed President Charles Evans also addressed the shortfall during an interview Tuesday. He said he’s “comfortable” with current policy, but is concerned about weak inflation. He added, the low inflation could be a catalyst for the Fed to reconsider policy, but highlighted the continued supply-side strength in the U.S. economy.
“The fundamentals of the economy continue to be solid, I think the consumer continues to be in a good position…labor markets continue to be strong,” Evans stated.
President Trump has called on the Central Bank to cut interest rates, saying there is “no inflation” and the U.S. economy would be “like a rocket ship” if the bank lowered rates.