Schmid of the Fed: Tariffs have raised economic uncertainty

The president of the Kansas City Federal Reserve, Jeff Schmid, said it would remain “fully focused” on inflation and warned that new imports to imports in the US could increase prices and reinforce the growing expectations of public inflation. Schmid’s prepared statements did not approach the March CPI or the pause announced by President Trump about certain tariffs.

Key points

  • Tariff ads have raised economic uncertainty, coincided with the fall of feeling and increased short -term inflation expectations.
  • Compared to the beginning of the year, there is a notable increase in the risk of greater inflation, lower employment and growth.
  • The growing possibility that Fed has to balance the risks of inflation with growth and employment.
  • Try to stay focused on inflation, does not feel very comforted by the theory that tariffs can have only a temporal effect on inflation.
  • He worries that an additional increase can raise inflation expectations, given the high level of previous inflation.
  • He is not willing to run any risk with the credibility of the Fed in inflation.
  • The growing debt supply of the US Treasury together with a potentially decreasing demand is a recipe for higher long -term interest rates.
  • The US is entering a challenging period from a position of strength, the labor market has remained robust.

Source: Fx Street

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