Neel Kashkari, President of the Federal Reserve Bank of Minneapolis, commented today on the state of the U.S. economy, pointing to significant uncertainty related to trade tariffs. The U.S. dollar is gaining slightly, while the Japanese yen is under heavy pressure. Data from Japan showed no year-over-year growth in chain store sales for February, disappointing expectations for a 1% YoY increase.
Neel Kashkari, Federal Reserve Bank of Minneapolis
- The impact of tariffs on interest rates more or less cancels out, so we should remain where we are.
- I’m uncertain about the effect of tariffs.
- I take the decline in confidence very seriously – the longer it lasts, the more meaningful it becomes.
- The good news is that if trade uncertainty is resolved, confidence could be restored.
- It’s conceivable that the decline in confidence could have a greater impact than the tariffs themselves.
- This is the most significant shift in sentiment in the last decade, excluding the coronavirus pandemic.
- A large part of this change stems from tariff-related uncertainty.
- Over the next year or two, we should be in a position to lower interest rates further.
- After the introduction of tariffs in 2018, we observed less reshoring of manufacturing to the U.S. than to other countries.
- Compared to other nations, the U.S. is relatively insulated from trade dynamics.
- Policy uncertainty is making the Fed’s job more difficult. The labor market remains strong – the biggest challenge is to finish the job.
Source: xStation5
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