Fed Official Says Possible Iran Escalation Among Recession Risks

This post was originally published on this site
https://i-invdn-com.akamaized.net/news/LYNXNPED8J0CJ_M.jpg
© Reuters. Fed Official Says Possible Iran Escalation Among Recession Risks© Reuters. Fed Official Says Possible Iran Escalation Among Recession Risks

(Bloomberg) — Federal Reserve Bank of Richmond President Thomas Barkin said a potential escalation of U.S. tensions with Iran is among the shocks that could threaten America’s record-long economic expansion, which for now looks “quite healthy.”

“There’s always the possibility of a ‘heart attack,’ or shock, perhaps caused by global risks,” Barkin said in the text of a speech Friday in Baltimore. “Imagine an escalation with Iran or a collapse in international economies.” Barkin’s prepared remarks came hours after — but didn’t explicitly reference — the U.S. strike that killed one of Iran’s most powerful generals and sent global markets reeling.

The Fed’s three interest-rate cuts in 2019 were a form of insurance against rising global uncertainty that have paid off “through the traditional channels, such as auto and home sales,” Barkin said.

U.S. central bankers last month left the benchmark interest rate unchanged in a range of 1.5% to 1.75% at their final meeting of the year and forecast continued growth — albeit at a slowing pace — for 2020 through 2022. Minutes of that gathering will be released in Washington later Friday, at 2 p.m.

The Richmond Fed chief — who doesn’t vote on interest rates this year — said he’s paying close attention to consumption of big-ticket items, such as homes and durable goods, and filings for unemployment benefits. He also said financial risks are worth watching, especially in the area of corporate lending, much of which is happening outside the regulated banking system.

Barkin said the U.S. expansion could be supported by a reduction in uncertainty to promote a better climate for business decision making.

“That includes trade actions and trade uncertainty, regulatory changes and regulatory uncertainty, geopolitical challenges and domestic politics,” Barkin said. “In my view, the biggest boost to our economy would come from lessening the uncertainty and lowering the volume.”

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.

Add Comment