Skip to main content

John C. Williams, president and CEO of the Federal Reserve Bank of New York, speaks to the Economic Club of New York on March 6, 2019.

LUCAS JACKSON/Reuters

The U.S. economy is strong despite trade tensions, and data showing tame inflation pressure are no sign that policy-makers are falling short of their goals, a top Federal Reserve policy-maker said on Friday.

“We have a strong economy in a good place,” with no sign of inflation pressures, Federal Reserve Bank of New York President John Williams said at a local business event in New York’s Bronx borough.

Interest rates, he said, are well positioned “to keep this going, to keep the economy on a strong trajectory.”

Story continues below advertisement

The Fed has kept short-term interest rates on hold this year in a 2.25-per-cent to 2.5-per-cent range after concerns over U.S.-China trade talks and global growth shook markets late last year. Mr. Williams, who is vice-chairman and a permanent voting member of the Fed’s policy-setting committee, said the current policies make sense for now.

First-quarter U.S. economic data came in stronger than forecasters initially expected, with initial readings showing growth at a 3.2-per-cent annual level, but difficulty bringing U.S.-China negotiations to a close threaten that trend.

The United States early on Friday increased tariffs on US$200-billion in Chinese goods to 25 per cent from 10 per cent, ratcheting up a 10-month trade war between the world’s two largest economies. Negotiators from both sides on Friday entered a second day of last-ditch talks to try to salvage an agreement.

“Trade tensions are still an issue,” Mr. Williams said, adding that he still expects growth of about 2.25 per cent in 2019.

Markets have been on guard for what they see as an increasing possibility that the Fed will have to respond to a weakening economy and tamer inflation pressures than their annual 2-per-cent target by cutting rates. Mr. Williams showed no signs of endorsing that view, saying that low inflation readings reflect “normal ups and downs” of economic data rather than a destructive trend.

U.S. consumer prices rose moderately in April and underlying inflation remained muted, Labour Department data showed on Friday.

President Donald Trump, who has repeatedly criticized the Fed for raising rates last year, said on Twitter that Friday’s data were further evidence of “very low inflation.” Many economists and policy-makers think tariffs could put more pressure on businesses to raise their prices.

Report an error
Due to technical reasons, we have temporarily removed commenting from our articles. We hope to have this fixed soon. Thank you for your patience. If you are looking to give feedback on our new site, please send it along to feedback@globeandmail.com. If you want to write a letter to the editor, please forward to letters@globeandmail.com.

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to letters@globeandmail.com. Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to letters@globeandmail.com. Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff.

We aim to create a safe and valuable space for discussion and debate. That means:

  • Treat others as you wish to be treated
  • Criticize ideas, not people
  • Stay on topic
  • Avoid the use of toxic and offensive language
  • Flag bad behaviour

Comments that violate our community guidelines will be removed.

Read our community guidelines here

Discussion loading ...

Cannabis pro newsletter