‘Significant uncertainty’ about fiscal policy under Trump, says Fed’s Fischer

Reuters

Vice Chairman of the U.S. Federal Reserve Board Stanley Fischer

Uncertainty about the scope of Donald Trump’s fiscal and trade policy will keep the Federal Reserve strictly focused on creating full employment and getting U.S. inflation near 2%, Fed Vice Chair Stanley Fischer said Saturday.

Fischer also stressed his hope that any reforms to Dodd-Frank financial regulation, which Trump has called a “disaster,” would not scale back bank capital requirements too aggressively.

“There is quite significant uncertainty about what’s actually going to happen, I don’t think anyone quite knows. It’s a process which involves both the administration and the Congress in deciding fiscal policy,” said Fischer, in response to a question at the Warwick Economics Summit Saturday in Coventry, England, Reuters reported.

“At the moment we’re going strictly according to what we see as our responsibility according to the law,” Fischer said of the Fed’s employment and inflation targets. The Fed took a pass on raising interest rates at back-to-back meetings when it last gathered in late January, maintaining what’s so far been a slow approach to reversing accommodative monetary policy as the economy churns higher.

Read: Trump rally as much about real economy as hopes for stimulus

As for banking regulation, “significantly reducing capital requirements would reduce the safety of the system and we certainly hope it’s not going to happen,” Fischer said, according to The Wall Street Journal.

Trump has ordered reviews of major banking rules that were put in place after the 2008-2009 financial crisis. Speculation for the speed of banking reform picked up amid Friday’s news that the Fed’s top bank regulator, Daniel Tarullo, said he would resign, potentially giving a boost to Trump’s plans.

Fischer said Saturday he does not believe Dodd-Frank as a whole is going to be repealed, but there may be some adjustments. In Fischer’s opinion that could include being less demanding of community banks.

Read: Dodd-Frank law can survive Trump, former Obama economy adviser says

Read: The Fed’s top lawyer — and Elizabeth Warren target — to retire

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