St. Louis Fed’s Musalem:
- Growth does appear to have slowed, surveys point to caution among businesses and consumers
- Patience with current policy appropriate as Fed gathers evidence inflation is returning to target
- Risks that inflation will stall above 2% or move higher in the near term appear to have increased
- Wary of assuming all tariff-related price increases will be temporary; second-round effects could be more persistent
- If labor market remains strong and second round tariff effects become apparent, Fed may need to keep rates higher for longer or consider more restrictive policy
- Baseline is for economy, job market to remain strong, inflation to fall
Comments are more hawkish in regard to the impact of Inflation versus the thoughts from the Fed Chair who see the impact as more transitory.
This article was written by Greg Michalowski at www.forexlive.com.
