Trade Analysis & Reviews: 04.02.2019 - The Fed paused to allow the...

04.02.2019 04:24 PM

The Fed paused to allow the US economy to grow.

The head of the Federal Reserve Bank of Minneapolis, Neel Kashkari, believes that the pause of the American regulator in the process of raising interest rates will allow the country's economy to continue to grow.

The official stressed that the US economy has the potential for growth, and a premature tightening of monetary policy can have a negative impact on it against the background of the crisis in Europe and the slowdown in China's economic growth.

Following the meeting last week, the US Federal Reserve System abandoned its plan for raising rates, noting that it will patiently approach changes in monetary policy in the future.

The soft rhetoric of the regulator, on the one hand, reassured investors, but, on the other, was perceived as a sign of a possible weakening of the economy.

N. Kashkari highlighted the main risks to the economy at the moment: a slowdown in the economic growth of the PRC and the uncertainty surrounding Brexit. He also added that the positive effect of tax reform is fading away because of growing concerns about the trade confrontation between the US and China, which has led to a decrease in investment activity.

In this case, the official appreciates the current state of the US economy. In his opinion, there are no signs of overheating at the moment, but the Fed does not need to take risks in the process of raising short-term interest rates.

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