— This is the script of CNBC's news report for China's CCTV on April 19, Thursday.
According to the Beige Book released by the Federal Reserve, U.S economy still has sustained growth. First is the growing commercial loan. Some local business's expense and investment have increased after the US sanctioned the tax cuts that boost the commercial loan.
The growth rate of commercial and industry rose, said several local Federal Reserve, for example, Loans in the St. Louis Fed Area achieved a 17% annual growth while the commercial loan and industry loan in Atlanta, Cleveland and other regions has a steady growth. The Dallas Fed reported that sales of local commercial and industrial real estate have grown significantly.
This is the economic benefit of the U.S. tax cuts for companies, and the risk to US economy caused by global trade friction is one of the highlights of the Beige Book. In the Beige Book released by the Fed Reserve in March, however, didn't mention "Tariffs" while "Tariffs" appeared 36 times in the Beige Book this month which tells the Fed Reserve's worries about trade friction.
[William Dudley, President of the Federal Reserve Bank of New York] "Well if trade barriers go up it is bad for the U.S. economy. You're going to have more inflation and you get less growth, lower productivity just a bad outcome."
Almost all local Feds reported a rise in local prices, even though it is moderate. The steel cost soared rapidly in some region after Trump announced to impose tariffs on imported steel and aluminum. But the market worries that the commodity price may increase further in the following months, especially steel and other construction material. The experts from manufacturing, agriculture and other industry expressed their concerns about the tariffs that the US government has introduced or plans to introduce.
[Maurice Obstfeld, IMF Chief Economist] "Well it really depends on how far things escalate from the types of measures that have been threatened so far that. Direct hit to growth wouldn't be that great although certain individuals in certain industries could suffer, the big risk would be if these sorts of actions spook asset markets, spook stock markets, and other markets and that could have a more serious effect on confidence in growth."
The market believes that the Fed will increase interest rate for at least 2 times or even 3 times this year because of the rally in economy and inflation. And it's obvious that the uncertainty of the U.S. trade and fiscal policy is 2 challenges for increasing interest rate. We will keep an eye on this issue.