Trade Uncertainty Remains 'Elevated' Despite Trump Deal with China - Federal Reserve
Uncertainties over US-China trade remain high as the Trump administration's interim deal with Beijing did not remove many existing tariffs between the two countries, the Federal Reserve said in its latest monthly meeting minutes
WASHINGTON (Pakistan Point News / Sputnik - 20th February, 2020) Uncertainties over US-China trade remain high as the Trump administration's interim deal with Beijing did not remove many existing tariffs between the two countries, the Federal Reserve said in its latest monthly meeting minutes.
"The effect of the recent trade agreement with China would be relatively limited, as trade uncertainty would likely remain elevated, with the possibility remaining of the emergence of new tensions as well as the re-escalation of existing tensions," the minutes of the central bank's January 28-29 meeting said on Wednesday.
The Federal Reserve said its policy-making committee, known as the FOMC, noted at the meeting that the so-called Phase One US-China deal signed on January 15 would "leave a large portion of tariffs in place."
"Many firms had already been making production and supply chain adjustments in response to trade tensions," the minutes added.
While a number of downside risks remained prominent, the FOMC members generally saw the distribution of risks to the economic outlook "as somewhat more favorable" than during their previous meeting on December 11.
It said business sentiment appears to have been buoyed by the US-China deal and the US-Mexico-Canada Agreement that President Donald Trump signed into law this month.
The risk of a "hard Brexit" has also receded while statistical models designed to estimate the probability of recession suggested that the likelihood of a slowdown occurring over the next year had fallen notably.
"Still, participants generally expected trade-related uncertainty to remain somewhat elevated, and they were mindful of the possibility that the tentative signs of stabilization in global growth could fade," the minutes said. "Geopolitical risks, especially in connection with the middle East, remained."
It added that the threat of the coronavirus, in addition to the human toll brought by the pandemic, had emerged as a new risk to the global outlook, which "warranted close watching."