The number one risk to economic growth is uncertainty on the trade front globally. But, "there are a lot of countervailing forces operating in the United States that will – in the end – mean that a lot of the threatened disruptions do not come to pass."
The key to addressing uncertainty from a monetary policy perspective, is to focus exclusively on the fundamentals. “I think central bankers really look more profoundly today at the fundamentals of what’s going on in the economy, rather than moving with every bump and wiggle. The market moves with bumps and wiggles. Central banks try to look through things [and] more to fundamentals.”
On interest rates, David says that central banks need to continue to be more data-dependent. “Clearly, we continue to be somewhat surprised – in North America in particular – at continuing low inflation in the face of high capacity utilization and rather low – historically low – unemployment rates. I think it’s that fundamental conundrum that all central banks are struggling with." Central banks have said, "they’re going to be data-dependent, that they’re not going to be on a route-march towards neutral interest rates, and there is indeed some uncertainty in today’s world on exactly where neutral is.”