WASHINGTON - The U.S. Federal Reserve is worried about trade tensions with China, but newly released details on policymakers' views suggest those concerns have not translated into concerns about the overall economy.
On the one hand, a "strong majority" of policymakers saw a potentially looming trade war as a "downside risk" for the U.S. economy, according to the minutes of the Fed's March 20-21 meeting released on Wednesday.
But another section of those same minutes showed there had been essentially no change in the number of Fed policymakers flagging elevated risks to economic growth.
Fourteen of the Fed's 15 policymakers in March considered uncertainty about growth to be "broadly similar" to that seen in normal times, unchanged from their assessment in December.
Only one policymaker saw higher-than-normal levels of uncertainty, down from two in December, when the Fed had 16 policymakers.
And the section of the minutes on risks and uncertainty shows that only one policymaker considers it more likely that future economic growth will be below current forecasts than above them.
"I guess they don't really see trade -- and all these factors combined -- as that huge of a risk," said Michael Feroli, an economist at JPMorgan and a former Fed staffer.
Trade tensions between the United States and China were heating up in the weeks prior to the Fed's March policy meeting, and have grown more acute since then.
Washington set stiff tariffs on many steel and aluminium imports on March 7, which Beijing criticized, saying they would have a "serious impact" on trade.
The relationship between the world's two largest economies grew especially strained after the Fed's last meeting, with China rising tariffs on U.S. aluminium exports on March 23.
In recent weeks, both sides have threatened to levy higher import taxes on tens of billions of dollars in additional goods, though there have also been some signs of easing tensions. U.S. President Donald Trump on Sunday predicted China would take down its trade barriers, while Chinese officials have said this is not the time for negotiations. Two days later, Chinese President Xi Jinping promised to further open the country's economy and lower tariffs on certain products, though the country's Foreign Ministry on Wednesday said that pledge was unrelated to the trade tensions with the United States.
Fed Chair Jerome Powell, who took the helm at the central bank in early February when Janet Yellen's term ended, said on Friday that the Fed saw risks to the economy as "roughly balanced."
The details released on Wednesday showed more Fed policymakers believe inflation could well be higher than they currently expect. In December, two policymakers thought that inflation was more likely to be lower than expected and two thought higher than expected was more likely.
But in March, three policymakers considered inflation poised to potentially outperform forecasts while none saw underperformance as more likely.