Fed’s Bullard Says US Economy to Slow Down in 2019 and 2020

For nearly two years the U.S. Federal Reserve has pushed ahead with steady rate increases in an economy that has done better than expected, boosted by government spending, tax cuts, and global growth that made the Fed’s policy choices seem almost a footnote.

The easy part may be over, St. Louis Federal Reserve President James Bullard said in an interview here, as possible “cracks” in the U.S. recovery begin to shape the central bank’s debate over where the Fed stands in a rate-rise cycle that began in December 2015, and how much further it should go.

As previous Fed rate increases start to curb mortgage and other markets, and the stimulus of tax cuts and government spending begins to fade, the Fed may face a year of difficult decisions, with rates still low by historic standards but growth ebbing.

“Whether there are cracks in the U.S. economy’s performance is one of the main challenges for the Fed going forward,” said Bullard. “I don’t have any reason to doubt the economy will slow in 2019 and 2020. It would be much tougher for the Fed to continue to raise at this pace in a slowing economy relative to where we have been.”

via Reuters

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