The “positive tone” coming out of Washington over the possibility of a post-Brexit trade deal between the US and UK has been welcomed by Britain's largest business organisation.

Continuing discussions for improving trade and investment

The Confederation of British Industry (CBI) said on Friday that while the immediate priority of the Trump Administration appeared to be renegotiating the North America Free Trade Agreement with Mexico and Canada, the longer-term ambitions of US Trade Representative Robert Lighthizer seemed to include a speedy trade deal with the UK.“This month (June), Robert Lighthizer made a public statement following discussions with Secretary of State for International Trade Liam Fox about the possibility of a new agreement 'soon after Brexit',” said the CBI.“In the interim period, according to the statement, the US is 'committed to continuing discussions for improving trade and investment and coordinating on addressing global excess capacity issues'.“The public statement sets a positive tone about the prospects for bringing down barriers to trade and investment between the US and the UK over both the short and longer-term.“The US and the UK already share a deep and diverse economic relationship, driving growth and prosperity on both sides of the Atlantic, so this positive tone will be welcomed by British and American businesses alike.”

US Federal Reserve likely to raise interest rates

Meanwhile, speculation remains rife over the possibility of the US Federal Reserve raising interest rates again this year following June's decision to raise the target range for the federal funds rate to 1-1.25 per cent.On Friday, James Bullard, president of the St. Louis Federal Reserve and an influential Fed policy-maker, said any further increase should be deferred until concrete reforms emerged from Washington.Mr Bullard told CNBC that weak data had undermined the Fed's hawkish stance and the central bank should take a more reactionary approach if and when it sees solid signs of growth.“The Fed can afford to wait and see what comes out of the political process,” said Mr Bullard, who admitted he had retreated from a more hawkish stance. “Some of (President Trump's) policies can provide growth but they've got to get them through congress.”

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When the Fed announced its most recent interest rate increase in June, it admitted that it expected US inflation to fall well short of its two per cent target this year.“The committee has been too hawkish for the data during the last 90 days or so,” said Mr Bullard. “The data has not been that great considering that we got going on this three-hike process in December, March and June. You'd like to make a move like that on the back of pretty strong data for the US economy but the consumption number was not that great.”Mr Bullard, who views are at odds with other policy-makers and investors who favour another rise this year, said the Fed did not need to “be pre-emptively raising rates ahead of reforms” and suggested further rate increases should be postponed until next year.For related news and features, visit our Brexit section.Access hundreds of global services and suppliers in our Online Directory  Get access to our free Global Mobility Toolkit

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