February 23, 2018 / 4:03 PM / a year ago

Deficits may hurt U.S. response to recessions -Fed official

NEW YORK, Feb 23 (Reuters) - The now “large” U.S. deficits may complicate the government’s ability to curb future recessions with tax and spending policies, so the Federal Reserve must depend less on fiscal policy, a top Fed policymaker said on Friday.

“Large deficits now may make future actions difficult” for the government, Boston Fed President Eric Rosengren said in prepared remarks to a conference of central bankers and economists here. He added it was “difficult to depend on” fiscal policies in the face of a recession “given political pressures and uncertainties.”

Since mid-December the Republican-controlled Congress and U.S. President Donald Trump aggressively cut taxes and boosted spending limits, two fiscal moves that are expected to push the annual budget deficit above $1 trillion next year and expand the $20 trillion national debt. (Reporting by Jonathan Spicer Editing by Chizu Nomiyama)

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