Federal Reserve officials stressed that careful measures should be taken in interest rate policies in the current economic outlook. Federal President Austan Ghoolsby and Boston Federal President Susan Collins have made important assessments of interest rates, inflation and trade tariffs.
Chicago Federal President Austan Ghoolsby said the economic flow needs to be monitored before taking a new step into interest rate policy. “The Fed's threshold for policy changes is now very high,” Goolsbee said, adding that all policy options need to be kept on the agenda.
Goolsbee said current tariffs will increase inflation and will have a negative impact on economic growth in the short term. Describing the tariff system as a “major scenario,” Ghoolsby said the Trump administration has suspended several measures, but the current levels surpass most scenarios.
Despite previous sales in the bond market, Goolsbee added that a strong decade of Treasury auction eased market concerns and that these sales were not limited to noting the difficulty of measuring financial conditions, Goolsbee avoided speculation about how the Fed would respond to market stress.
Noting that it remains employment data, Goolsbee said it prefers to rely on market inflation expectations over survey data.
Boston Federal Government President Susan Collins said current interest rate policies are well positioned and stable retention seems like the best option. Collins said there is still room for interest rate cuts in 2025, but said rising price pressures could slow the cuts.
Collins said tariffs will put upward pressure on inflation and slow economic growth, warning that this could lead to a much higher core inflation this year than 3%. Collins also said it is important to stabilize inflation expectations.
*This is not investment advice.
