MNI POLICY: Fed's Clarida: Can Be Patient on Rate Adjustments

By Jean Yung

     WASHINGTON (MNI) - The FOMC can remain patient in assessing whether any

change to interest rates is needed, Federal Reserve Vice Chair Rich Clarida said

Thursday, adding that growth in the U.S. and abroad has slowed while

international events like Brexit pose risks to the outlook.

     "Prospects for foreign economic growth have been marked down, and important

international risks, such as Brexit, remain," he said. With the fed funds rate

now in the broad range of estimates of neutral, "we can be patient as we assess

what adjustments, if any, will be appropriate to the stance of monetary policy."

     Following are other major takeaways from his prepared remarks at an

Institute of International Finance summit in Washington:

     --Core inflation has been "muted" and some indicators of longer-term

inflation expectations are at the low end of their target range

     --The FOMC's baseline projections see growth for the year running somewhat

above its longer-run trend and core PCE inflation remaining near the 2%

objective

     --After runoffs end in September, the FOMC will likely hold the size of its

balance sheet at a stable level "for a time thereafter" and let the gradual

increase in non-reserve liabilities slowly shrink the level of reserves

     --The FOMC plans to discuss the maturity composition of its balance sheet

at future meetings

     --The FOMC will review its policy framework this summer, including monetary

policy strategy, tools, and communications practices

--MNI Washington Bureau; +1 202-371-2121; email: jean.yung@marketnews.com

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