In addition to Powell’s comments, New York Fed President John Williams said during a speech to the Economic Club of New York that gross domestic product (GDP) growth will likely slow to 2 percent in 2019 after a year of 3 percent growth.
Williams cited three major factors for the lowered estimate: a global economic slowdown, tighter financial conditions, and geopolitical uncertainty. However, an eventual slowdown in GDP growth shouldn’t be cause for alarm.
“Now, I know this talk of slowing growth is causing uncertainty, some hand-wringing, and even fear of recession. But slower growth shouldn’t necessarily come as a surprise,” Williams said in prepared remarks. “For quite some time, the economic fundamentals have pointed to GDP growth much lower than what we saw in the 1990s, for example.”
As for interest rate policy for 2019, Williams said the Fed will be data-dependent and more flexible.
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