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St. Louis Fed’s Musalem: Risks that inflation will stall above 2% or move higher in the near term appear to have increased
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Patience with current policy appropriate as Fed gathers evidence inflation is returning to target
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Wary of assuming all tariff-related price increases will be temporary; second-round effects could be more persistent
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If labor market remains strong and second round tariff effects become apparent, Fed may need to keep rates higher for longer or consider more restrictive policy
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Baseline is for economy, job market to remain strong, inflation to fall
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Growth does appear to have slowed, surveys point to caution among businesses and consumers
This article was written by Greg Michalowski at www.forexlive.com.