(Adds comments, background)
By Fergal Smith
May 24 Dallas Federal Reserve Bank
President Robert Kaplan said on Wednesday that he feels “very
strongly” that U.S. trade relationships with Canada and Mexico
help U.S. competitiveness, in remarks that come as President
Donald Trump looks at renegotiating the North American Free
Trade Agreement.
“I don’t want to see us to jeopardize those relationships:
it would cost U.S. jobs,” Kaplan said in Toronto during a dinner
sponsored by the C.D. Howe Institute.
“I am hopeful these agreements will be addressed in a
constructive way.”
Kaplan, otherwise, avoided directly commenting on policies
favoured by Trump, who has criticized U.S. trade agreements with
Canada and Mexico, among others, saying they hurt U.S. workers.
Turning to interest rates, Kaplan said he sees two more rate
hikes as a base case. The Fed has signaled that it may raise
rates two more times this year, although most analysts expect
only one more rate hike.
Kaplan said his economic growth forecast was lower than the
annual 3 percent growth assumed in the Trump administration’s
budget proposal.
For faster growth, structural issues like the aging
population would need to be addressed, he said.
Kaplan stressed the Fed’s decisions would be based on
objective analysis, and would not be swayed by political
considerations.
“Criticism should not change our decision making and how we
do our jobs,” Kaplan said Wednesday. “We’ll keep political
considerations out of it and will certainly not be moved by
political pressure.”
Kaplan said he was not factoring anything from Trump’s
proposals into his forecasts because it was too hard to know
what will actually become law.
Regulatory review could be positive for growth, he said, as
could infrastructure spending, both policies that Trump has
promised.
But Kaplan said, as he has many times before, that
immigration, which Trump has railed against, can help alleviate
the slowdown in population growth that is keeping the U.S.
economy from growing as fast as it has in the past.
(Reporting by Fergal Smith; Writing by Ann Saphir; Editing by
Simon Cameron-Moore)