Whither the US economy? No one knows for sure — and the Fed is no exception

Markets remain vulnerable to corrosive uncertainty of the Trump administration's policies

- Ovais Subhani

The US Federal Reserve has kept interest rates on hold and eased worries about an impending recession but it could not hide its concerns over President Donald Trump's economic policies.

The survey of central bank officials that accompanied the March 19 rate decision pointed to the high level of uncertainty around the estimates on growth, inflation and unemployment that underpin their policy settings.

Indeed, these levels of uncertainty were the highest in two decades.

While there is always a modicum of guesswork in economic forecasts, uncertainty due to a lack of transparency and predictability around policy is usually rare in advanced economies. This is a particularly unusual state of affairs in the US, which has long attracted global investors with the clarity of its economic game plans.

But Mr Trump's erratic conduct, the execution of his global trade war and the scattergun approach to government downsizing means no one really knows what will happen next — and the Fed is no exception.

"Uncertainty around the economic outlook has increased," it said in a statement. The sentence was not in its rate-decision statement in January.

Mr Kerry Craig, global market strategist at J.P. Morgan Asset Management, said: "We sympathise with the Fed's challenge in accurately forecasting the economic trajectory amongst a deluge of policy noise from Washington.