The two-day research conference is the centerpiece of the year-long review. Fed officials and leading academics are set to debate whether they need to make changes in order to shore up inflation expectations and improve their defenses for the purposes of fighting the next economic downturn, whenever it comes.
The conference, which was announced in November, is taking place amid heightened volatility in financial markets, owing to increasing concerns about Trump’s threats to further restrict global trade. It also follows a string of government reports on consumer prices that have shown inflation drifting below the Fed’s 2% target so far this year, which many economists fear will limit policy makers’ ability to stimulate the economy if necessary.
In remarks earlier on Tuesday, Chicago Fed President Charles Evans brushed aside the idea the Fed needed to cut rates in response to market pressure. Evans votes on monetary policy this year.
“With inflation being a little bit on the light side, there’s the capacity to adjust policy if that’s necessary, but the fundamentals for the economy continue to be solid,” Evans told CNBC television. “The consumer is solid. I think we have to think through what this really means.”
Speaking Monday, St. Louis Fed President James Bullard, who also votes on the central bank’s interest-rate setting Federal Open Market Committee this year, became the first FOMC member to call for a rate cut, citing below-target inflation and the threat to economic growth posed by trade tensions.
The FOMC next meets June 18-19 in Washington.
This article was provided by Bloomberg News.