The head of the St. Louis Federal Reserve warned Tuesday that the U.S. economy could see a sharper slowdown than expected in the coming months.
James Bullard, president of the Federal Reserve Bank of St. Louis, said risks facing the economy include uncertainty over global trade policy and the slowing of the global economy.
“U.S. monetary policy cannot reasonably react to the day-to-day give and take of trade negotiations,” Bullard said Tuesday during a presentation at a conference in London, adding that he doesn’t expect trade policy uncertainty will subside in the years ahead.
That uncertainty, Bullard said, “Creates a disincentive for global investment.”
“Slower global growth may feed back into slower growth in the U.S.,” he said.
Bullard didn’t mention the ongoing trade tensions between the United States and China, which began to cool Friday after President Trump announced officials from Washington and Beijing reached a “substantial phase one deal.” Under the agreement, which hasn’t yet been written, China will buy between $40 billion and $50 billion in American agricultural products and the U.S. called off an increase in tariffs on $250 billion worth of goods from China.
Because of the risks that remain high for the U.S. economy, the Federal Reserve “may choose to provide additional accommodation going further, but decisions will be made on a meeting-by-meeting basis.”
The Fed has cut interest rates two consecutive times, and Bullard, a member of the central bank’s Federal Open Market Committee, said it “has tried to insure against this downside risk by dramatically altering the path of monetary policy” this year.
Bullard voted against the Fed’s decrease in interest rates following its meeting in September, as he preferred a steeper cut.
