Fed’s Williams sees headwinds from tariffs, open mind on rates

June 6, 2019

By Richard Leong

NEW YORK (Reuters) – New York Federal Reserve Bank President John Williams said Thursday that concerns about escalating trade tariffs and slowing global growth are boosting uncertainty and holding back business investment, but he is keeping an open mind on interest rates.

And while the inverted yield curve is “informative” about what markets believe the Fed should do, he said, it does not force the Fed to cut rates. The Fed may leave interest rates where they are, and may need to “adjust” them, Williams said in New York. He added that he and his staff will look at the issue intensively starting next week, ahead of a mid-June rate-setting meeting in Washington.

Williams said his base case for U.S. GDP growth this year is for an above-trend 2.25% to 2.5%, but tailwinds from last year’s tax cuts and government spending increase are fading and headwinds from trade tensions are rising.

(Writing by Richard Leong; Editing by Chizu Nomiyama)

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