Fed's Goolsbee: Unclear how tariffs will drive inflation
Federal Reserve (Fed) Bank of Chicago President Austan Goolsbee admitted that tariff effects have remained far below what many policymakers initially feared, but expressed caution that the Fed still needs to watch "soft" data carefully to avoid getting caught in a crossfire between interest rates and inflation.
Key highlights
Critical to look at soft economic data at current moment of transition.
Tariffs are not unlike oil shocks with stagflationary implications.
Current form of uncertainty is disconcerting for economy.
Thus far, impact of tariffs not as bad as feared.
Tariff impact blunted by lowered levels, exemptions.
Less immediate pass through of tariffs relative to past.
Unclear right now how tariffs will drive inflation.
The surprise so far is that inflation has jumped yet on tariffs.
If we do not see inflation jump on tariffs, then economy still on golden path.
Source : Fxstreet
