Fed members comment on US economy and tariffs 🗽Inflation spike will be only temporary? USDIDX loses 0.6%

Federal Reserve members Christopher Waller and Kevin Hammack shared their views today on the U.S. economy and monetary policy. Hammack indicated that the Fed is unlikely to cut interest rates in May, while Waller suggested he is “willing to look past tariff-related price increases,” as these are likely to be transitory.

Statements from Christopher Waller (Fed)

• Focusing solely on data brings the risk of a delayed policy response.

• Rate cuts may become necessary if unemployment rises.

• I’m willing to look past price increases caused by tariffs.

• It will take courage to view tariff-related price spikes as temporary.

• A slowdown in demand due to tariffs could offset some of the inflationary impact.

• I still strongly believe that the impact of tariffs will be a one-time price level effect.

• Inflation progress over the past 18 months has been uneven.

• It’s possible that tariffs could lead to a rapid increase in unemployment.

• It's not just the level of unemployment, but the speed of change that matters.

• The second half of the year should bring more clarity on the impact of tariffs.

• We could see prices rise as layoffs begin.

• The easiest way to offset tariff costs is by cutting payrolls.

• It is unlikely that we’ll see clear effects of tariffs by July.

• There is no obvious reason why tariffs should be excluded from the fiscal debate.

• We need better control over the budget deficit.

• Smaller tariffs will have a modest pass-through effect.

• It wouldn’t surprise me to see more layoffs and higher unemployment.

• Companies are trying to figure out how to operate under tariff conditions.

• Tariffs have become part of most economic discussions.

Statements from Kevin Hammack (Fed)

• It’s possible that Trump’s stance on the Fed Chair could influence the interpretation of data.

• Declines in stocks, bonds, and the dollar should be closely monitored.

• The Fed could act in June if the data clearly supports it. So far, the U.S. economy remains very resilient.

• The Fed will respond quickly if necessary.

• I see encouraging signs in hard data, but soft data remains a concern.

• The Fed needs to remain patient—it's too early to consider action in May.

• I don’t currently have a base case—I’m exploring multiple scenarios for the economy.

• We still don’t know what effects uncertainty and trade policy will have on the economy.

• Firms are pausing investments due to uncertainty. Uncertainty is weighing heavily on business planning.

Source: xStation5