Fed Musalem and Hammack comment on US monetary policy 🏛️EURUSD gains slightly

Today, Federal Reserve members Alberto Musalem and Beth Hammack spoke about U.S. monetary policy and the risks associated with tariffs. Below are their key comments.

Comments from Fed's Musalem:

• If trade tensions are durably de-escalated, inflation could return to target, the labor market could remain resilient, and current monetary policy would continue to be appropriate.

• Tariffs may have both temporary and lasting effects on inflation.

• Even after the May 12th de-escalation, tariffs are still likely to weaken the labor market and push prices higher.

• Economic policy uncertainty remains unusually high.

• The U.S. economy has strong underlying fundamentals, the labor market is stable, and inflation has eased, although it remains above the 2% target.

• If inflation expectations become unanchored, Fed policy should prioritize price stability.

• A balanced response to rising inflation and unemployment is possible if inflation expectations remain well-anchored.

• Current monetary policy is well-positioned for existing conditions.

Comments from Fed's Hammack:

• Tremendous uncertainty continues to weigh on economic activity.

• Future policy decisions may offset the effects of current trade policy.

• I see a stagflation scenario as a likely possibility.

• I don’t want to overreact to developments in international trade.

• Uncertainty surrounding the White House tax bill is complicating our forecasts.

EURUSD (H1 interval)

Source: xStation5