Members of the US Fed "Trade Disputes Preoccupy the Uncertainties"

As trade wars between the United States and China become more visible, members of the Federal Reserve of the US central bank are also very concerned about trade disputes.

According to a report released in June by the Federal Open Market Committee (FOMC), most Fed members have badessed uncertainty and risk as trade policies. They also expressed concern that such uncertainties could have a negative impact on investment and the business climate.

In fact, uncertainties on trade policy in some regions indicate that capital expenditure plans have been reduced or delayed.

The good news is that Fed members have reaffirmed their policy of gradual rate hikes. He was supportive of increasing the federal funds (FF) rate next year or later in the year to more than the neutral rate.

Fed members said that it was appropriate to gradually increase the target range of the reference interest rate to a level that was set at an estimate or slightly higher than expected for 2019-2020.

"Some participants expressed concerns about inflationary pressures and financial imbalances that could lead to serious economic slowdowns as the economy spins longer than potential growth," he said.

The Wall Street Journal (WSJ) badyzed the fact that Fed members focused on how to stop the overheating of the economy during a meeting last month.

If prices can exceed the 2% target in the short term, they should stabilize at the target level in the medium term. The minutes said, "The majority of commissioners have seen inflation stay around 2% in the medium term."

Some Commissioners have argued that rising energy prices could lead to temporary price hikes, but that temporarily keeping prices above the Fed's target could help the economy.

The Fed raised its benchmark interest rate by 0.25 percentage points to 1.75 to 2.00% at its meeting last month and increased the expected rate of total rate hike of interest from three times to four times. I think there will be two other opportunities to do so in the future.

In a statement issued at the time, the letter removed the statement that the federal funds rate would remain below neutral interest rates for extended periods.

New York = Correspondent of Shim Jae Woo [email protected]