The president of the Bank of the Federal Reserve (FED) of Chicago, Austan Goolsbee, hit the markets on a volatile Friday with more bad news, noting that the inconsistent policy approaches of the US government cause a high level of Economic uncertainty that hinders Fed to determine where the economy is directed, and specifically inflation.
Key outstanding aspects
This was a solid employment report.
Tariffs add some uncertainty.
The potential that commercial wars in escalation interrupt supply chains is very real.
I hope, after what we saw recently, that tariffs do not end up being a great impediment to trade.
I am comfortable with the path of the economy.
The consumer survey that shows a jump in short -term inflation expectations is less influential to me.
Salary growth is approximately consistent with 2%inflation.
Market -based long -term inflation expectations show that the market believes that the Fed will take 2%inflation.
A unique tariff is a transitory shock.
Repurposition would complicate the impact of tariffs.
I see the neutral rate much lower from where we are today.
The Fed is waiting now, but in the next 12-18 months, the established policy rate will be quite below where it is now.
The speed at which the rates fall will be slower with more uncertainty.
We need to reach the rate established in a prudent calendar.
What is happening in long -term rates is not our goal; That is more treasure competition.
I think it will take longer than the end of 2025 to reach the neutral policy rate.
I think we are on their way to inflation of 2%.
I don’t think Fed plays a role in any sovereign background.
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.
