Fed’s Clarida says US economy in a good place

Wednesday, 27 February 2019 00:35 - - {{hitsCtrl.values.hits}}

Federal Reserve Vice Chairman Richard Clarida greets a member of the Dallas Fed staff before boarding a bus to tour South Dallas as part of a community outreach by US central bankers, in Dallas, Texas, US, 25 February – Reuters

DALLAS (Reuters): The US economy is operating at near full employment, and with inflation near the Fed’s 2-percent goal and upward pressures “muted,” the point of policy now is to keep it there, Federal Reserve Vice Chair Richard Clarida said on Monday.

“We think that we have the ability to be patient in terms of looking at the data” to decide where to set interest rates, Clarida told Dallas Fed President Robert Kaplan in an interview at the Dallas Fed’s headquarters in front of an audience that included local business leaders and several Fed policymakers.

“The US economy is in a good place right now....It’s a good situation to be in, and we really want to do whatever we can to help support and maintain the economy,” Clarida said. Fed Chairman Jerome Powell, who gives an update on monetary policy to Congress on Tuesday, has also described the economy as being in a good place.

The Fed raised rates four times in 2018, but last month said it would be patient in deciding when to tighten policy again, if at all. Investors interpreted the move as indicating that the Fed’s three-year push to raise rates had ended. Clarida flagged some risks to the US economy, including a slowdown in Asia and Europe that are “definitely a relevant factor” to Fed policy. He also noted that while the Fed has some room to lower rates and otherwise fight any future downturn with monetary policy, other central banks around the world are stuck with rates near where they were when they were in full crisis-fighting mode.