WASHINGTON (Reuters) – The U.S. Federal Reserve may be stuck with a volatile global trade environment for years, but cannot respond to the “day-to-day gave and take” of major nations feuding over the rules of the game, St. Louis Federal Reserve Bank President James Bullard said on Tuesday.

Bullard, who was among the earliest advocates of the lower rates that the Fed moved toward last week, said he feels further rate reductions “may be desirable” later this year amid likely slowing economic growth and uncertainty over the direction of trade talks between the United States and China.

But he also tried to downplay the sense that the Fed’s decision-making was tied too closely to how the market reacts to the evolving trade debate, or to the sometimes unexpected policy choices of the Trump administration. Events since May, when President Donald Trump’s trade announcements stoked market volatility and shaped the Fed’s decision to cut rates last week, raised the possibility that the White House could count on further Fed action to offset higher tariffs or other steps it takes in its effort to reshape the global trading system.

Speaking a day after major stock markets fell by roughly 3 percent and the Trump administration labeled China a “currency manipulator,” Bullard said the Fed “cannot reasonably react to the day-to-day give-and-take of trade negotiations.”

“I think of trade regime uncertainty as simply being high in the current environment,” Bullard said in a presentation on the U.S. economy and monetary policy before a National Economists Club luncheon. “I do not expect this uncertainty to dissipate in the quarters and years ahead.”

Even though further policy steps may be appropriate, Bullard said the economy may still be adjusting to what he termed a “sea change” in Fed policy since late last year, when expectations shifted from steady rate hikes to what investors now foresee as a series of rate reductions.

Bullard said those steps may be warranted given weak inflation, bond markets that still signal economic weakness and the risk that “global trade uncertainties” may cause U.S. economic growth to slow more sharply than expected.

But he also noted that with Treasury rates having fallen by more than a full percentage point in recent months, it make take time for businesses and households to adjust to lower borrowing costs.

“U.S. monetary policy is considerably more accommodative than it was as of late last year,” said Bullard, currently a voter on the Fed’s policy-setting committee. “While additional policy action may be desirable, the long and variable lags in the effects of monetary policy suggest that the effects of previous actions are only now beginning to impact macroeconomic outcomes.”

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