The President of the Federal Reserve Bank of Chicago highlighted on Thursday the significant challenges posed by the U.S. trade and tariff policy, noting that its indirect consequences are undermining consumer confidence and stability in the economic outlook.
Key Highlights:
The Fed’s decision-making timetable is not aligned with the market’s.
The goal is to establish a clear, long-term strategy, not rush to conclusions.
In uncertain times, the Fed’s role is to proceed cautiously.
Despite volatility, the hard economic data remains strong.
Unemployment is nearing full employment levels.
The economy appears to be on track for sustainable growth.
There is an increasing emphasis on “soft data,” as it provides quicker insights than traditional lagging indicators.
Short-term tariffs may not significantly alter the economy’s trajectory, but loss of confidence could have severe consequences.
Anxiety is prevalent in the Chicago Fed district, with concerns about a return to pandemic-era economic conditions.
The imposition of tariffs is likened to a stagflationary shock, creating additional challenges for the Federal Reserve.
The Chicago Fed President emphasized the critical importance of maintaining confidence in the economy, warning that any significant loss of consumer trust could lead to substantial economic setbacks.
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