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The Fed: Fed officials warn Trump that fiscal policy must be smart

Bloomberg News

New York Fed President William Dudley on Monday called for spending programs that would be automatically triggered by an economic downturn.

Without mentioning President-elect Donald Trump by name, Federal Reserve officials on Monday warned that the incoming administration’s fiscal policy must be intelligently designed to spur the economy while maintaining a rainy-day fund to help the economy withstand another downturn.

“Smart” government spending and tax reform could help the economy grow, said Chicago Fed President Charles Evans in a speech to the Executives Club of Chicago, according to Reuters.

Earlier, New York Fed President William Dudley had said fiscal policy should be aimed at cushioning the next downturn, even though the economy is “in reasonably good shape” at the moment and downside risks have been reduced by the prospect of stimulative fiscal policy by the new Congress.

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