Yesterday, Federal Reserve members Thomas Barkin and John Williams commented on the state of the U.S. economy. Below is a summary of their remarks.
Williams (Federal Reserve)
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The slowdown in the pace of the Fed’s balance sheet reduction was a natural step.
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Long-term inflation expectations are currently well-anchored.
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The Fed must maintain the stability of long-term inflation expectations.
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I do not know exactly where monetary policy needs to be in the remainder of the year.
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The Fed has the ability to gather more data before making any policy changes.
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Current monetary policy is well-positioned to navigate through uncertainty.
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I expect the economy to continue growing, but at a slower pace than last year.
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The economy is not currently in a state of stagflation.
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The Fed will not allow high inflation to become entrenched.
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I will not dismiss weak survey and anecdotal data.
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The economy is currently in very good shape.
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I will not forecast the likelihood of a recession; the economy remains solid and the labor market strong.
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Risks to both growth and inflation are equally important.
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Uncertainty is currently very high, and concerns about a slowdown are increasing.
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My baseline scenario is relatively stable inflation this year, though with upside risks.
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There is a clear risk that inflation may come in higher than the Fed’s projections.
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Consumer goods are likely to experience a quick pass-through of tariff effects into prices.
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Intermediate goods may respond to tariffs with a delay.
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The impact of tariffs could play out over an extended period.
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It is too early to assess the full effects of tariffs—details matter. I am closely watching the data to evaluate the impact of tariffs on prices.
Barkin (Federal Reserve)
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The stagflation of the 1970s was characterized by unanchored inflation expectations—we are not seeing that today.
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This is not the time to make forecasts on the number of rate cuts for this year.
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Current data looks decent, but I see risks on the employment side.
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I am concerned about both inflation and the labor market.
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The balance sheet runoff process could proceed more slowly and last longer.
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I’m in no hurry to cut interest rates.
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Rate cuts require confidence that inflation is under control.
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I am not convinced that higher costs won’t be passed on to consumers.
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Suppliers report they will have to pass higher prices on.
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Consumers say they are tired of paying elevated prices.
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Therefore, I see certain risks to the labor market stemming from tariffs.
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My base case is that it will take a long time to fully assess the impact of tariffs.
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Create account Try a demo Download mobile app Download mobile appDonald Trump is set to announce a new tariff plan on April 2nd in the White House Rose Garden.
Source: xStation5