Fed Vice Chair Richard Clarida reiterated the view that US economy is in a “very good place”. Also current interest rate lies in the range of neutral and remain appropriate. Softness in recent inflation is seen as “transitory”. Though, he also outlined the conditions for a rate cut, in persistent inflation miss or deterioration in global economic financial developments.

In a speech delivered yesterday, he said “the U.S. economy is in a very good place, with the unemployment rate near a 50-year low, inflationary pressures muted, expected inflation stable, and GDP growth solid and projected to remain so.”

Also, the federal funds rate is now in the range of estimates of its longer-run neutral level, and the unemployment rate is not far below many estimates of u*. And, “plugging these inputs into a 1993 Taylor-type rule produces a federal funds rate between 2.25 and 2.5 percent, which is the range for the policy rate that the FOMC has reaffirmed”.

Fed’s decision to leave interest rate unchanged in May “reflects our view that some of the softness in recent inflation data will prove to be transitory.”

Nevertheless, Clarida also noted “if the incoming data were to show a persistent shortfall in inflation below our 2 percent objective or were it to indicate that global economic and financial developments present a material downside risk to our baseline outlook, then these are developments that the Committee would take into account in assessing the appropriate stance for monetary policy.”

Clarida’s full speech here.

Trump expressed his dissatisfaction on Fed Chair Jerome “Jay” Powell again yesterday. He told the Washington post that “So far, I’m not even a little bit happy with my selection of Jay. Not even a little bit.” He went further and said “Fed is a much bigger problem than China”.

He added “and I’m not blaming anybody, but I’m just telling you I think that the Fed is way off-base with what they’re doing.” He pointed to China and Euro being “accommodative”. But “we’re not getting any accommodation”.

Trump complained again that “I’m doing deals, and I’m not being accommodated by the Fed.” And, “they’re making a mistake because I have a gut, and my gut tells me more sometimes than anybody else’s brain can ever tell me.”