Impact of Trump policies only somewhat factored-in, Fed's Fischer says

The US central bank is watching the White House's new policies with keen interest, but thus far their potential impact on the economy had only been factored into their forecasts somewhat, its second-highest ranking official said.

In an interview with CNBC, the vice-president of the Federal Reserve, Stanley Fischer, said the White House's policies will "certainly have an impact on what happens in the economy".

However, it was necessary to wait and see to learn more about those policies before acting on them.

"You don't have to put a huge weight on something that you don't really know is going to happen. So, we take it into account somewhat."

The FOMC's forecasts included a "very small fiscal expansion", he added.

Regarding the Trump administration's decision to pull its healthcare reform bill before the vote on the floor of the US House of Representatives, Fischer said it may have led him to modify his"internal calculus" but that it had not really impacted what the Fed does.

For his part, Frank Kelly at Deutsche Bank believed the immediate impact from Trump's healthcare reform setback would be limited, because much of the Trump reflation trade had already been priced-out.

However, the potential implications of the rift among US Republicans should not be played down, Kelly said.

A big package of reforms in the States was still "very important" - especially if global growth slowed.

Against that backdrop, Kelly saw a 40% chance of a government shutdown on 28 April, adding that Trump's Border Adjustment Tax was unlikely to even make it into a final bill and that the new corporate tax rate will be nearer to 25% than to the 15% to 20% range which had been expected.

As an aside, Fischer said that two more interest rate hikes from the central bank in 2017 "seem about right".