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Washington (awp / afp) – Uncertainties in trade may hurt investment and confidence, the Fed said in minutes of its latest June meeting on Thursday, but the US economy remains strong. 19659002] The US central bank cites growing concerns among companies about trade tensions and the rise of basic materials such as steel and aluminum.
The Fed decided at this meeting on 12 and 13 to raise its interest rates by a quarter of a point for the second time this year and its officials had estimated that a continuation of this recovery would be "appropriate".
The markets had then estimated that the tone The Fed indicated that the Fed would be ready to raise rates twice more this year to anticipate any risk of accelerating inflation and not just one as they had previously anticipated.
"Most participants (at the meeting) noted that the uncertainties and risks badociated with trade policy have intensified and expressed their concern that this uncertainty and these risks could potentially have negative effects on business sentiment. and investment spending, "notes the report of the meeting.
US companies have indicated to the Fed that they are already feeling the impact, including a rise in prices but also" the reduction or postponement of capital investment projects due to trade policy uncertainties ", while cautioning against" other adverse effects on investment in the future ".
" Conditions in the agricultural sector are somewhat improved but the (Fed) contacts are concerned about the potential effects of higher tariffs on their exports, "the report.
Solid Growth
The Trump administration embarked on a trade war with its major trading partners, including China, the European Union, and Canada, imposing tariffs of 10 percent on aluminum and 25% on steel which triggered retaliation on their part.
New US tariffs are due to come into effect on Thursday night to 34 billion Chinese imports and Beijing will impose in return of taxes on an equivalent amount of US imports.
But the minutes also underline that the US economy continues to grow and that rising oil prices will support investment in the energy sector. [19659002] However, many sectors struggle to fill available jobs, which in turn encourages them to slow down development projects, raise wages and invest in cars.
While wage increases remain modest so far, Fed officials estimate that inflation has now reached the 2% target, although it is still too early to say that it will be maintained at this level.
The Fed also notes that consumer spending, the main driver of US growth, proved solid in the second quarter after having proved modest on the first and that they benefit in particular from effects of the tax reform that came into force at the beginning of the year
The next meeting of the Fed is scheduled for July 31 and August 1. It should in principle not be followed by a press conference by its president Jerome Powell
afp / rp
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