U.S. Markets

Fed policymakers see U.S. economy on good footing

(Reuters) - The U.S. economy is doing well and looks set to stay that way next year, two top Federal Reserve policymakers said on Friday, remarks that suggest they are content to leave interest rates where they are.

FILE PHOTO: Federal Reserve Vice Chair Richard Clarida reacts as he holds his phone during the three-day "Challenges for Monetary Policy" conference in Jackson Hole, Wyoming, U.S., August 23, 2019. REUTERS/Jonathan Crosby

“I think the economy is in a good place. U.S Federal Reserve Vice Chair Richard Clarida said in an interview with Fox Business Network, adding that the consumer has never been in better shape. “We have the strongest labor market in 50 years, we have low and stable inflation, we have solid growth and our baseline outlook for the economy is more of the same in 2020.”

Speaking to students and faculty earlier in the day at the Borough of Manhattan Community College, New York Fed President John Williams summed it up this way: “The economy is performing about as well as we have seen in decades.”

Williams and Clarida work closely with Fed Chair Jerome Powell, who on Wednesday announced the U.S. central bank’s well-telegraphed decision to hold interest rates steady in a range of 1.5% to 1.75%, and signaled borrowing costs would remain there for the foreseeable future.

The Fed cut rates three times from July to October in a mini-easing cycle, designed to sustain the U.S. economic expansion amid slowing global growth and a drop in business investment caused by uncertainty amid the 17-month long U.S.-China trade war.

On Friday the world’s two largest economies announcing a Phase 1 agreement that reduces some U.S. tariffs in exchange for increased Chinese purchases of American farm goods.

“Any resolution of that uncertainty, assuming it’s a good deal, is obviously a positive for the economic outlook,” Clarida said. He added, though, that trade was just a number of risks the Fed will monitor.

“This is obviously a negotiation; it looks like it’s going in a positive direction,” Clarida said. “But ... global developments more broadly have been something we’ve been monitoring. You’ve had a global slowdown this year, emerging markets have been slowing down, there are muted inflation pressures. So it’s not just any one thing that we are focusing on.”

Williams, for his part, said he expects the U.S. economy to grow about 2% annually over the next couple of years.

Fed officials are working to keep inflation, which is short of the central bank’s 2% target, from getting too low to give policymakers more room for adjusting monetary policy.

Additional reporting by Ann Saphir; editing by Jonathan Oatis