Federal Reserve Board of Governors member, Austan Dean Goolsbee, commented US economy, inflation and tariffs impact today. Here is the highlight from his remarks.
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Fed Goolsbee
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The inflation rate over the last six months was 1.9%, and it's wrong to say we're not making progress on inflation.
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Current wage growth is consistent with 2% inflation when accounting for productivity.
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The job market seems stable at full employment, and the recent jobs report is not a sign of overheating.
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Interest-sensitive parts of the economy show impact of Fed restraint, though this is offset by factors like business confidence.
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Productivity is very noisy as a data series but very important to watch; will determine if there is overheating or not.
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The rise in long-term rates is not explained by inflation expectations. It would be a concern if long rates started rising on the basis of inflation expectations.
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12 to 18 months from now, rates would be a fair bit lower if current expectations are met.
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If conditions are stable and there is no uptick in inflation, with full employment, rates should go down.
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The Fed does have to think about issues like tariffs and other nations' responses that impact prices.
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The issue would be determining if tariffs are a one-time shock to prices or a persistent one.
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The current high annual inflation number is largely reflecting the uptick of early last year; wrong to say there has not been recent progress.
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Some component of rise in long rates is from higher than expected growth and expected slower pace of Fed cuts.
EURUSD (M15 interval)
The EUR/USD pair is down 0.3% today, attempting to recover some of its earlier losses following remarks from Federal Reserve official Austan Goolsbee.
