(2/2) Clarida: U.S. Close to full employment,...>

FED: (2/2) Clarida: U.S. Close to full employment, big benefit to keeping

economy there. `Don't see a crack in the consumer', never been in better shape.

- Investment weaker. Have seen a rebound in housing.

- Won't comment on dollar strength being impediment to hitting inflation target;

won't comment on 'who pays tariffs'.

- Policy works with a lag. Interest-sensitive sectors going to benefit, durable

goods in particular.

- Asked about whether Fed has achieved a soft landing: says US operating in

range of trend growth (notes range of views on Fed's SEP, which has median

1.7-1.8%; 'I'm more optimistic than median'), unemployment near 50-yr low, wages

picking up in today's report, wage inflation not a source of concern, showing up

in price inflation. Share of income going to labour has increased.

- Re what mid-cycle means: no parallel is perfect. Have previously referred to

1995/1998 episodes. We are not in late cycle.

- Re Fed purchase announcement on Oct 11: This is not QE, this is central

banking 101. We believe we can achieve objectives buying T-Bills alone.