TORONTO (Reuters) - Dallas Federal Reserve Bank President Robert Kaplan said on Wednesday that he feels “very strongly” that U.S. trade relationships with Canada and Mexico help U.S. competitiveness, in remarks that come as President Donald Trump looks at renegotiating the North American Free Trade Agreement.
“I don’t want to see us to jeopardize those relationships: it would cost U.S. jobs,” Kaplan said in Toronto during a dinner sponsored by the C.D. Howe Institute.
“I am hopeful these agreements will be addressed in a constructive way.”
Kaplan, otherwise, avoided directly commenting on policies favored by Trump, who has criticized U.S. trade agreements with Canada and Mexico, among others, saying they hurt U.S. workers.
Turning to interest rates, Kaplan said he sees two more rate hikes as a base case. The Fed has signaled that it may raise rates two more times this year, although most analysts expect only one more rate hike.
Kaplan said his economic growth forecast was lower than the annual 3 percent growth assumed in the Trump administration’s budget proposal.
For faster growth, structural issues like the aging population would need to be addressed, he said.
Kaplan stressed the Fed’s decisions would be based on objective analysis, and would not be swayed by political considerations.
“Criticism should not change our decision making and how we do our jobs,” Kaplan said Wednesday. “We’ll keep political considerations out of it and will certainly not be moved by political pressure.”
Kaplan said he was not factoring anything from Trump’s proposals into his forecasts because it was too hard to know what will actually become law.
Regulatory review could be positive for growth, he said, as could infrastructure spending, both policies that Trump has promised.
But Kaplan said, as he has many times before, that immigration, which Trump has railed against, can help alleviate the slowdown in population growth that is keeping the U.S. economy from growing as fast as it has in the past.
Reporting by Fergal Smith; Writing by Ann Saphir; Editing by Simon Cameron-Moore
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