Representatives of the Federal Reserve System (FRS) of the United States doubt the advisability of further tightening monetary policy amid growing volatility in financial markets and a possible slowdown in the US economy.
Robert Kaplan, President of the Federal Reserve Bank of Dallas, admits the possibility of abandoning interest rate increases in the first half of 2019. According to the official, the Fed should postpone the strengthening of monetary policy in the first quarters of the coming year. The reason for this R. Kaplan considers the increase in volatility in global financial markets and uncertainty about the US economy.
The expert draws attention to three key problems that demonstrate the state of affairs in the global market: slowing global growth, tightening financial conditions and expanding credit spreads. These factors have a negative effect on financial markets, and another interest rate increase may aggravate the situation. The head of the Federal Reserve Bank of Dallas is confident that no action should be taken on interest rates until current problems are resolved. "We should be patient and see how the situation develops. We should not rush to increase the rate during the first few quarters of this year," summed up R. Kaplan
At the end of 2018, at the last meeting of the Federal Committee for Open Market Operations (FOMC), representatives of the department worsened forecasts for a possible rise in interest rates in 2019. After the collapse of US stock indices, the majority of market participants expect to suspend the policy of raising rates in the coming year.
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