The president of the Bank of the Federal Reserve (FED) of St. Louis, Alberto Musalem, added his voice to the Fed speakers who warn that US commercial policy under the direction of the Trump administration is ready not only to weigh on growth, but also could exacerbate price volatility, one of the favorite phrases of the Fed to refer to inflation.
Key points
Monetary policy is currently well positioned.
A balanced response to greater inflation and unemployment is feasible if inflation expectations remain anchored.
If inflation expectations are disagree, the FED policy should prioritize price stability.
The American economy has an underlying strength, the labor market is stable, inflation has decreased but is above the 2%objective.
Uncertainty in economic policy is unusually high.
Even after the decala of May 12, tariffs will probably lead to a weakening of the labor market and higher prices.
Tariffs have both a temporary and persistent effect on inflation.
If commercial tensions are broken down in a lasting way, inflation could return to the objective, the labor market would remain resilient and current monetary policy would remain appropriate.
Source: Fx Street
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.
