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(Reuters) – Eric Rosengren, chairman of the Boston Federal Reserve, said Tuesday that the economy was "relatively mild," but said he was closely monitoring the release of data to evaluate the Magnitude of the risks associated with trade tensions and global slowdown.
"If these risks become a reality, the appropriate monetary policy would be to aggressively relax," said Rosengren in a speech prepared for delivery to the Stonehill College's Leo J. Meehan School of Business in Easton, Massachusetts. "Obviously, trade and geopolitical problems may escalate, resulting in a much more fragile situation than forecast in the economic forecasts."
Until now, this is not the case, he said. As long as US consumers maintain their spending and the global economy will not deteriorate further, the US economy will likely continue to grow by about 2 percent, and tighter labor markets will gradually reduce inflation, Rosengren said.
"This is a particularly good time to closely monitor incoming data to determine whether further adjustments are needed to achieve" the Fed's objectives for full employment and inflation of 2%, said Rosengren.
Rosengren was one of two Fed decision-makers to cast a dissenting vote in July when the US central bank decided to cut borrowing costs for the first time since 2008, saying he saw no clear and convincing reason to do.
Since then, US President Donald Trump has intensified trade tensions. New tariffs on Chinese imports will come into effect this weekend and others will be applied later this year, unless the world's second-largest economy agrees to a new trade deal with the United States. .
New signs of the deterrent effect of the trade war on the US manufacturing sector appeared Tuesday, with new data showing that US mill activity declined last month for the first time in three years and that new orders have falled.
However, while Rosengren had acquiesced in the "high" risks of the US-China trade war, he remained convinced that most economic forecasts and most financial market indicators point to continued growth rather than growth. An imminent slowdown. Even the inverted yield curve, he said, is more of a sign of struggling economies abroad pushing investors to buy US Treasury securities shelters, than a marker for money. An impending recession.
Rosengren's remarks on Tuesday were his last public comment before the next Fed meeting on Sept. 17-18.
(Report by Ann Saphir, edited by Leslie Adler)
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