Feds Barkin And Williams Comments on The State of The U.S Economy

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)

• The slowdown in the pace of the Fed’s balance sheet reduction was a natural step.
• Long-term inflation expectations are currently well-anchored.
• The Fed must maintain the stability of long-term inflation expectations.
• I do not know exactly where monetary policy needs to be in the remainder of the year.
• The Fed has the ability to gather more data before making any policy changes.
• Current monetary policy is well-positioned to navigate through uncertainty.
• I expect the economy to continue growing, but at a slower pace than last year.
• The economy is not currently in a state of stagflation.
• The Fed will not allow high inflation to become entrenched.
• I will not dismiss weak survey and anecdotal data.
• The economy is currently in very good shape.
• I will not forecast the likelihood of a recession; the economy remains solid and the labor market strong.
• Risks to both growth and inflation are equally important.
• Uncertainty is currently very high, and concerns about a slowdown are increasing.
• My baseline scenario is relatively stable inflation this year, though with upside risks.
• There is a clear risk that inflation may come in higher than the Fed’s projections.
• Consumer goods are likely to experience a quick pass-through of tariff effects into prices.
• Intermediate goods may respond to tariffs with a delay.
• The impact of tariffs could play out over an extended period.
• 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)

• The stagflation of the 1970s was characterized by unanchored inflation expectations—we are not seeing that today.
• This is not the time to make forecasts on the number of rate cuts for this year.
• Current data looks decent, but I see risks on the employment side.
• I am concerned about both inflation and the labor market.
• The balance sheet runoff process could proceed more slowly and last longer.
• I’m in no hurry to cut interest rates.
• Rate cuts require confidence that inflation is under control.
• I am not convinced that higher costs won’t be passed on to consumers.
• Suppliers report they will have to pass higher prices on.
• Consumers say they are tired of paying elevated prices.
• Therefore, I see certain risks to the labor market stemming from tariffs.
• My base case is that it will take a long time to fully assess the impact of tariffs.

USD Index (Daily Chart)

Donald Trump is set to announce a new tariff plan on April 2nd in the White House Rose Garden.

Source: xStation5

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