Today, Thomas Barkin of the Federal Reserve commented on U.S. monetary policy and the state of the American economy. Here are the key points from his remarks:
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I currently see the monthly breakeven jobs rate in the range of 0 to 50 thousand new positions.
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The economy continues to expand, though not as strongly as in 2022 and 2023.
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The 2% inflation target has proven effective globally and enjoys broad support.
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It made sense to take action given the risks to the labor market.
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Incoming data will determine whether the Fed should cut rates further or not. The Federal Reserve needs to shift a bit more toward fulfilling its employment mandate.
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Unemployment looks somewhat shakier, but inflation conditions have improved.
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We cannot ignore the recent revisions to hiring data. The employment trend is beginning to move in the wrong direction.
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The key to sustaining consumer spending is whether people start losing jobs or not.
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The current level of the unemployment rate is not a concern, but the trend could be heading in the wrong direction.
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Consumer spending remains reasonably healthy among both higher- and lower-income households.
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The recent rate cut should support the labor market while maintaining pressure on inflation, which still remains above target.
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The Fed is now focused on balancing its objectives.
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Firms want to pass along higher costs – including those from tariffs – to consumers, but pushback from customers may limit how much they can do so.
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The labor market may be weakening, while at the same time the supply of workers is also growing more slowly.
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