Remote escalation of trade tensions could raise worries about the pandemic economic recovery, a top Federal Reserve official said Friday.
“Right now, it’s darned hard to say how current discussions might evolve, … but if we saw broadening and retaliatory allots spreading, that could dent global confidence,” Fed Governor Lael Brainard declared CNBC’s Sara Eisen on “Power Lunch.” “It could disturb global supply chains, so it’s certainly a material uncertainty to the outlook.”
Patronage tensions between the U.S. and China have increased recently as the Trump furnishing takes a more protectionist stance. Earlier this month, President Donald Trump interrogated U.S. Trade Representative Robert Lighthizer to consider $100 billion in additional bill of fares against China. Last month, the U.S. slapped tariffs on up to $60 billion in annual Chinese connotations.
These tensions have weighed on financial markets recently as investors dread a trade war between the two largest world economies may be around the corner.
“Prerogative now, the discussions over trade are really ones that may be impacting human being businesses,” Brainard said.
However, Brainard also said the U.S. compactness appears capable of handling tighter monetary policy. “The outlook looks compatible to me for continued gradual increases in the federal funds rate,” she noted. “My feeling is that the outlook is for continued, solid growth.”
Her comments come as Cache yields have climbed sharply this week. The benchmark 10-year raise the white flag rose to its highest level since Feb. 22, while the two-year income traded at a 9½-year high.
The Fed expects to raise rates three times this year, according to its up-to-date set of economic projections.