The president of the Bank of the Federal Reserve (FED) of St. Louis, Alberto Musalem, said on Wednesday that tariffs will make more difficult for the Fed to make short -term changes in the policy rates.
Key aspects
I hope that US economic growth is materially below the estimated 2%trend.
Inflation expectations are kept anchored, it is necessary for the Fed to maintain them that way.
Financial conditions have hardened, but I don’t see market dysfunction in recent volatility.
The tension between the objectives of the dual mandate of the Fed as the risks of a slower growth and higher inflation begin to materialize.
The markets are responding to reevaluations of global growth.
Business contacts say they are not resorting to dismissals, but are adopting a waiting approach and seeing in their hiring and capital expense plans.
We will adopt a balanced approach to monetary policy while inflation expectations are maintained anchored.
It is risky to assume that Fed can ignore the highest prices due to tariffs, there is the possibility that some effects may persist.
The basic perspective is not recession, but confidence in decline, the highest prices and a blow to the wealth of households point to slower growth.
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.
