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The Fed could find itself in a policy Catch-22 if tariffs spike inflation and slow growth
A complicated scenario is emerging surrounding the tariff drama that could put the Federal Reserve in an uncomfortable Catch-22, unsure whether to use its policy levers to tame inflation or boost growth. With many bridges to cross yet in President Donald Trump’s efforts to use the levies as a tool both of foreign and economic policy, the central bank will have a delicate balance to strike. Many economists expect the tariffs both to raise prices and shave the pace of gross domestic product, with the main question being a matter of degree on the extent of any need for Fed policy adjustments. “Maybe you get that ... (full story)
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- From federalreserve.gov|Feb 4, 2025
Thank you, Professor Smith. It is an honor to be speaking to you today here at Lafayette College. I am glad to have the opportunity to return to such a historically important place as Easton, Pennsylvania, and the Lehigh Valley. This area was part of this country's colonial beginnings, it was instrumental in the rising of the industrial age, and, as the home to Crayola, it very literally played a role in coloring how we see the world. Today, this region is leading the way forward with its many outstanding institutions of higher education, very prominently including, of course, Lafayette College. Today, I would like to take this opportunity to share with you my outlook for the U.S. economy and my views of appropriate monetary policy. This is a useful time to do that, as my colleagues and I on the Federal Open Market Committee (FOMC), the Federal Reserve's primary monetary policymaking body, held our first meeting of 2025 just last week. Overall, the U.S. economy is starting the year in a good position. I expect inflation's slow descent to continue, and I anticipate that economic growth and labor market conditions will remain solid. I have learned, however, that it is wise to be humble about my projections. There is always a great deal of uncertainty around any economic forecast, and currently we face additional uncertainties about the exact shape of government policies, as well as their economic implications. Last week, my FOMC colleagues and I discussed the latest economic developments and reviewed data that arrived since our previous policy meeting in December. At the conclusion of that meeting, I voted in support of the Committee's decision to maintain the target range for the federal funds rate at 4-1/4 to 4-1/2 percent. This decision was made in support of our goals to achieve maximum employment and inflation at the rate of 2 percent over the longer run. I remain focused on setting policy to achieve the dual-mandate goals given to us by Congress: maximum employment and stable prices. Sound monetary policy and positive supply-side developments have contributed to the achievement of sustained economic growth in recent years, the return of low unemployment, and inflation moving sustainably toward our 2 percent objective. I remain committed to returning inflation to our target while sustaining the solid labor market. Now is an appropriate time to assess the path forward for the economy. I am happy to be here today to share my views with you. post: JEFFERSON EXPECTS GRADUAL CUTS TO CONTINUE OVER MEDIUM TERM post: FED'S JEFFERSON: NO NEED TO HURRY FURTHER RATE CUTS, STRONG ECONOMY MAKES CAUTION APPROPRIATE INTEREST RATES LIKELY TO FALL OVER MEDIUM TERM EXPECT DISINFLATION TO CONTINUE, THOUGH PROGRESS MAY BE SLOW FED FACES UNCERTAINTY AROUND GOVERNMENT POLICY EXPECT GROWTH AND… post: JEFFERSON PREDICTS SLIGHT DECREASE IN GDP GROWTH FOR 2025
- From anz.co.nz|Feb 4, 2025
The ANZ World Commodity Price Index rose 1.8% m/m in January. All sectors except forestry managed to lift during the month, but the largest gains were made by meat and wool. The ...
- From pmi.spglobal.com|Feb 4, 2025
China's services economy commenced 2025 in growth territory as incoming new business continued to rise. That said, the pace of new business and activity growth softened since ...
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- Posted: Feb 4, 2025 7:24pm
- Submitted by:Category: Fundamental AnalysisComments: 0 / Views: 3,562