Fed bankers Williams and Barkin comment on US economy and inflation

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