REUTERS
"Fed leaves rates unchanged, cites rising risk of higher inflation and unemployment"
By Howard Schneider and Ann Saphir
May 7, 2025
Summary
* US central bank leaves policy rate in 4.25%-4.50% range
* Outlook remains uncertain as Trump policies evolve
* Policy statement cites still-solid pace of growth amid risks
WASHINGTON, May 7 (Reuters) - The Federal Reserve held interest rates steady on Wednesday but said the risks of higher inflation and unemployment had risen, further clouding the economic outlook as the U.S. central bank grapples with the impact of Trump administration tariff policies.
The economy overall has "continued to expand at a solid pace," the Fed said in a policy statement, attributing a drop in first-quarter output to record imports as businesses and households rushed to front-run new import taxes.
The labor market also remained "solid" and inflation was still "somewhat elevated," the central bank's policy-setting Federal Open Market Committee said, repeating the language used in its previous statement.
But the latest statement highlighted developing risks that could leave the Fed with difficult choices in coming months.
"Uncertainty about the economic outlook has increased further," the FOMC said at the end of a two-day meeting during which officials agreed unanimously to keep the central bank's benchmark interest rate steady in the 4.25%-4.50% range.
"The Committee is attentive to the risks to both sides of its dual mandate and judges that the risks of higher unemployment and higher inflation have risen," the statement said.
Speaking at a press conference following the FOMC meeting, Fed Chair Jerome Powell said "despite heightened uncertainty, the economy is still in a solid position."
He noted Fed policy will need to be nimble and said "we believe that the current stance of monetary policy leaves us well positioned to respond in a timely way to potential economic developments."
Powell also noted that trade policy remains a source of uncertainty that affirms the Fed's need to be in a wait-and-see mode.
"I don't think we can say...which way this will shake out," he said, adding "I think there's a great deal of uncertainty about, for example, where tariff policies are going to settle out."
U.S. stock prices briefly extended gains after the release of the Fed statement before turning lower.
Treasury yields fell.
The direction of policy will depend on which of the job and inflation risks develop, or, in the more difficult outcome, whether inflation and unemployment increase together and force the Fed to choose which risk is more important to try to offset with monetary policy.
A weaker job market would typically strengthen the case for rate cuts; higher inflation would call for monetary policy to remain tight.
"For the time being the Fed remains in a holding pattern as it waits for uncertainty to clear," said Ashish Shah, chief investment officer of public investing at Goldman Sachs Asset Management, adding that "recent better-than-feared jobs data has supported the Fed's on-hold stance, and the onus is on the labor market to weaken sufficiently to bring a resumption of its easing cycle."
The Fed's policy rate has been unchanged since December as officials struggle to estimate the impact of President Donald Trump's import tariffs, which have raised the prospect of higher inflation and slower economic growth this year.
When policymakers last updated their economic and policy projections in March, they anticipated reducing the benchmark rate by half a percentage point by the end of this year.
Reporting by Howard Schneider and Michael S. Derby; Editing by Paul Simao and Andrea Ricci
https://www.reuters.com/business/fed-li ... 025-05-07/
THE FEDERAL RESERVE
Re: THE FEDERAL RESERVE
REUTERS
"Trump castigates Fed's Powell for not cutting rates, downplays inflation risk"
By Andrea Shalal and Steve Holland
May 8, 2025
Summary
* Trump has criticized Powell over rate policy for years
* Fed kept rates on hold this week in 'wait and see' posture on tariffs
* Traders bet US-UK trade deal announced Thursday means fewer Fed rate cuts
WASHINGTON, May 8 (Reuters) - U.S. President Donald Trump renewed his criticism on Thursday of Federal Reserve Chair Jerome Powell, calling him a "fool" and complaining that the Fed is refusing to lower interest rates.
Trump has been on a virtual war path against Powell in recent weeks, threatening to fire him -- and then backing away from that threat.
He has repeatedly lashed out at Powell in posts on his social media site, calling him "a major loser" in one post.
Trump, speaking one day after the Fed, as financial markets had widely expected, kept its key borrowing rate unchanged, said cutting interest rates would be "like jet fuel" for the economy, "but he doesn't want to do it."
He said Powell is "not in love with me."
Early last week, in remarks suggesting that he is more knowledgeable about interest rates than Powell, Trump said he was not "a huge fan of" Powell.
The Fed this week kept short-term borrowing costs in the 4.25%-4.50% range, where they have been since December.
While the big tariffs imposed by Trump are likely to increase both inflation and unemployment, the economy so far has shown little sign of either, Powell said on Wednesday, giving the central bank time to wait until there is more clarity on where tariffs actually end up and assess their effect on prices and jobs.
At that point the Fed can act as needed, and potentially aggressively, he said.
Trump had a different view.
"'Too Late' Jerome Powell is a FOOL, who doesn't have a clue," he wrote in a post on Truth Social on Thursday morning.
"Oil and Energy way down, almost all costs (groceries and 'eggs') down, virtually NO INFLATION ..."
Cutting interest rates typically boosts the economy, but in a time of above-target inflation, doing so could also unleash an upward spiral of price pressures that Powell has said must be avoided.
Trump named Powell as the Fed chair in 2018, during his first term in the White House, and Democratic President Joe Biden appointed Powell to a second four-year term in 2022.
Trump and British Prime Minister Keir Starmer on Thursday announced a "breakthrough deal" on trade, the first since Trump announced steep import levies on most U.S. trading partners on April 2 before subsequently pausing some of them to allow time to reach country-by-country deals.
That first glimmer of certainty amid what had been an increasingly foggy outlook makes the Fed actually less likely to cut rates aggressively.
That was the read from financial markets, as traders pulled back Thursday from what had been overwhelming bets on a July start to interest rate reductions, with any more than three rate cuts by year's end seen as increasingly unlikely.
Trump has made no secret of his dissatisfaction with Powell's conduct of monetary policy ever since shortly after picking him as Fed chair early in his first term.
Trump's suggestion last month that he would like Powell gone sent stocks and bonds both down as investors priced in the chance the Fed could lose its independence and thereby its ability to restrain inflation.
Powell, asked about Trump's criticisms in his news conference on Wednesday, declined to comment.
He has said he intends to complete his term as chair, which ends in about a year.
Powell met a total of three times with Biden.
Powell's calendars also show he had a 90-minute dinner with Trump at the White House during his first stint there, as well as several other shorter encounters, but has not spoken with him since 2019.
Powell said on Wednesday that he never has sought and never would seek a meeting with a president.
"It's always been the other way," he said Wednesday.
Talking to Powell, Trump said on Thursday, is "like talking to a wall."
Reporting by Andrea Shalal and Steve Holland; additional reporting by Ann Saphir; Editing by Mark Porter, Chris Reese and Leslie Adler
https://www.reuters.com/world/us/trump- ... 025-05-08/
"Trump castigates Fed's Powell for not cutting rates, downplays inflation risk"
By Andrea Shalal and Steve Holland
May 8, 2025
Summary
* Trump has criticized Powell over rate policy for years
* Fed kept rates on hold this week in 'wait and see' posture on tariffs
* Traders bet US-UK trade deal announced Thursday means fewer Fed rate cuts
WASHINGTON, May 8 (Reuters) - U.S. President Donald Trump renewed his criticism on Thursday of Federal Reserve Chair Jerome Powell, calling him a "fool" and complaining that the Fed is refusing to lower interest rates.
Trump has been on a virtual war path against Powell in recent weeks, threatening to fire him -- and then backing away from that threat.
He has repeatedly lashed out at Powell in posts on his social media site, calling him "a major loser" in one post.
Trump, speaking one day after the Fed, as financial markets had widely expected, kept its key borrowing rate unchanged, said cutting interest rates would be "like jet fuel" for the economy, "but he doesn't want to do it."
He said Powell is "not in love with me."
Early last week, in remarks suggesting that he is more knowledgeable about interest rates than Powell, Trump said he was not "a huge fan of" Powell.
The Fed this week kept short-term borrowing costs in the 4.25%-4.50% range, where they have been since December.
While the big tariffs imposed by Trump are likely to increase both inflation and unemployment, the economy so far has shown little sign of either, Powell said on Wednesday, giving the central bank time to wait until there is more clarity on where tariffs actually end up and assess their effect on prices and jobs.
At that point the Fed can act as needed, and potentially aggressively, he said.
Trump had a different view.
"'Too Late' Jerome Powell is a FOOL, who doesn't have a clue," he wrote in a post on Truth Social on Thursday morning.
"Oil and Energy way down, almost all costs (groceries and 'eggs') down, virtually NO INFLATION ..."
Cutting interest rates typically boosts the economy, but in a time of above-target inflation, doing so could also unleash an upward spiral of price pressures that Powell has said must be avoided.
Trump named Powell as the Fed chair in 2018, during his first term in the White House, and Democratic President Joe Biden appointed Powell to a second four-year term in 2022.
Trump and British Prime Minister Keir Starmer on Thursday announced a "breakthrough deal" on trade, the first since Trump announced steep import levies on most U.S. trading partners on April 2 before subsequently pausing some of them to allow time to reach country-by-country deals.
That first glimmer of certainty amid what had been an increasingly foggy outlook makes the Fed actually less likely to cut rates aggressively.
That was the read from financial markets, as traders pulled back Thursday from what had been overwhelming bets on a July start to interest rate reductions, with any more than three rate cuts by year's end seen as increasingly unlikely.
Trump has made no secret of his dissatisfaction with Powell's conduct of monetary policy ever since shortly after picking him as Fed chair early in his first term.
Trump's suggestion last month that he would like Powell gone sent stocks and bonds both down as investors priced in the chance the Fed could lose its independence and thereby its ability to restrain inflation.
Powell, asked about Trump's criticisms in his news conference on Wednesday, declined to comment.
He has said he intends to complete his term as chair, which ends in about a year.
Powell met a total of three times with Biden.
Powell's calendars also show he had a 90-minute dinner with Trump at the White House during his first stint there, as well as several other shorter encounters, but has not spoken with him since 2019.
Powell said on Wednesday that he never has sought and never would seek a meeting with a president.
"It's always been the other way," he said Wednesday.
Talking to Powell, Trump said on Thursday, is "like talking to a wall."
Reporting by Andrea Shalal and Steve Holland; additional reporting by Ann Saphir; Editing by Mark Porter, Chris Reese and Leslie Adler
https://www.reuters.com/world/us/trump- ... 025-05-08/
Re: THE FEDERAL RESERVE
REUTERS
"NY Fed survey finds deteriorating views on household financial situation"
By Michael S. Derby
May 8, 2025
Summary
* NY Fed finds public soured on financial situation in April
* NY Fed data finds mixed views on future inflation pressures
* NY Fed: Three-year-ahead expected inflation highest since July 2022
NEW YORK, May 8 (Reuters) - Americans’ views on their current and future financial situations, as well as their expectations for future earnings and income, soured in April, amid mixed views on the outlook for inflation, the Federal Reserve Bank of New York said on Thursday.
In its latest Survey of Consumer Expectations, the bank found that last month, as President Donald Trump initiated a dramatic trade war against the rest of the world, households’ perceptions of their current and future financial situations “deteriorated sharply.”
Survey respondents also projected slower gains in income and earnings in April relative to March, and for unemployment to rise and for it to be harder to find a job.
Spending xpectations, however, rose in April versus March.
On the inflation front, it was a mixed bag.
Survey respondents projected year-ahead inflation at 3.6%, unchanged from March, while the three-year-ahead expectation rose to the highest level since July 2022 at 3.2%, from March’s 3%.
Five years from now, survey respondents see inflation at 2.7% versus March’s 2.9%.
The report found the public expecting accelerating price pressures for rent, gasoline and college costs, as well as a projected year-ahead rise in home prices of 3.3%, from March’s 3%.
The release of the New York Fed report comes after the Fed decided on Wednesday to hold its short-term interest rate target steady amid a time of high uncertainty and rising economic risks.
While the Fed views the current state of the economy as solid, the trade tariff regime now being pursued by the Trump administration has unsettled the outlook, with many economists expecting it to lead to higher inflation and unemployment, while slowing growth from where it otherwise would have been.
"Despite heightened uncertainty, the economy is still in a solid position,” Fed Chair Jerome Powell said in a press conference following the Fed policy gathering.
But he also acknowledged that while the economy is “healthy,” it is one that’s “shrouded in some very downbeat sentiment on the part of people and businesses.”
Powell also offered a note of caution on data detailing consumer mood, saying “the link between sentiment data and consumer spending has been weak.”
The state of inflation expectations data has loomed large in Fed calculations because officials broadly agree that where the public projects price pressures to go has a strong impact on where they are now.
New York Fed data has not shown the same rise in inflation expectations evidenced by other surveys like those from the University of Michigan.
Over recent weeks numerous Fed officials have said it’s critical to keep expectations stable amid the current period of uncertainty and inflation risks driven by Trump’s policy agenda.
Reporting by Michael S. Derby; Editing by Andrea Ricci
https://www.reuters.com/world/us/ny-fed ... 025-05-08/
"NY Fed survey finds deteriorating views on household financial situation"
By Michael S. Derby
May 8, 2025
Summary
* NY Fed finds public soured on financial situation in April
* NY Fed data finds mixed views on future inflation pressures
* NY Fed: Three-year-ahead expected inflation highest since July 2022
NEW YORK, May 8 (Reuters) - Americans’ views on their current and future financial situations, as well as their expectations for future earnings and income, soured in April, amid mixed views on the outlook for inflation, the Federal Reserve Bank of New York said on Thursday.
In its latest Survey of Consumer Expectations, the bank found that last month, as President Donald Trump initiated a dramatic trade war against the rest of the world, households’ perceptions of their current and future financial situations “deteriorated sharply.”
Survey respondents also projected slower gains in income and earnings in April relative to March, and for unemployment to rise and for it to be harder to find a job.
Spending xpectations, however, rose in April versus March.
On the inflation front, it was a mixed bag.
Survey respondents projected year-ahead inflation at 3.6%, unchanged from March, while the three-year-ahead expectation rose to the highest level since July 2022 at 3.2%, from March’s 3%.
Five years from now, survey respondents see inflation at 2.7% versus March’s 2.9%.
The report found the public expecting accelerating price pressures for rent, gasoline and college costs, as well as a projected year-ahead rise in home prices of 3.3%, from March’s 3%.
The release of the New York Fed report comes after the Fed decided on Wednesday to hold its short-term interest rate target steady amid a time of high uncertainty and rising economic risks.
While the Fed views the current state of the economy as solid, the trade tariff regime now being pursued by the Trump administration has unsettled the outlook, with many economists expecting it to lead to higher inflation and unemployment, while slowing growth from where it otherwise would have been.
"Despite heightened uncertainty, the economy is still in a solid position,” Fed Chair Jerome Powell said in a press conference following the Fed policy gathering.
But he also acknowledged that while the economy is “healthy,” it is one that’s “shrouded in some very downbeat sentiment on the part of people and businesses.”
Powell also offered a note of caution on data detailing consumer mood, saying “the link between sentiment data and consumer spending has been weak.”
The state of inflation expectations data has loomed large in Fed calculations because officials broadly agree that where the public projects price pressures to go has a strong impact on where they are now.
New York Fed data has not shown the same rise in inflation expectations evidenced by other surveys like those from the University of Michigan.
Over recent weeks numerous Fed officials have said it’s critical to keep expectations stable amid the current period of uncertainty and inflation risks driven by Trump’s policy agenda.
Reporting by Michael S. Derby; Editing by Andrea Ricci
https://www.reuters.com/world/us/ny-fed ... 025-05-08/
Re: THE FEDERAL RESERVE
REUTERS
"Fed officials, citing uncertainty, reiterate patient policy stance"
By Michael S. Derby
May 9, 2025
Summary
* Fed officials point to economic uncertainty, trade policy risks
* US tariffs may boost inflation, complicate Fed policy decisions
* Fed aims to balance inflation control, job market strength
May 9 (Reuters) - The first wave of Federal Reserve officials to weigh in after this week's policy meeting reiterated on Friday that the current economic uncertainty calls for monetary policy patience as Trump administration trade policy boosts risks to the outlook.
When it comes to the current state of Fed policy, "we're in a good place," New York Fed President John Williams said in an interview with Bloomberg Television.
Declining to speculate where monetary policy will go amid the uncertainty, he said, "let's collect more data, information about what's happening with trade policy" and its impact on the economy and then decide what that means for the Fed's next policy steps.
Fed Governor Adriana Kugler, who spoke in a separate Bloomberg Television interview, said the healthy economy "gives us time" to make more progress lowering inflation pressures before needing to consider a next step.
Both Williams and Kugler described the current state of interest rate policy as placing a modest amount of restraint on economic activity.
The U.S. central bank held its benchmark interest rate steady in the 4.25%-4.50% range on Wednesday and flagged the rising economic uncertainty.
Speaking in a press conference after the end of the two-day policy meeting, Fed Chair Jerome Powell said, "despite heightened uncertainty, the economy is still in a solid position," adding "we believe that the current stance of monetary policy leaves us well positioned to respond in a timely way to potential economic developments."
President Donald Trump's trade policy is the key source of uncertainty for the Fed and broader economy.
In a bid to bring back more manufacturing to the U.S., Trump has slammed nations around the world, particularly China, with very high tariffs.
Many economists believe these import taxes will drive up inflation pressures from levels already above the Fed's 2% target.
At the same time, they're likely to depress economic growth and boost unemployment.
But there's little clarity on how this will all play out, with the outlook further complicated by Trump's constant tariff adjustments and assurances that a slew of trade deals are imminent.
Williams, speaking at a conference in Iceland before his television interview on Friday, said "my own view is I expect growth this year to be ... considerably slower than it was last year, inflation to be higher, unemployment ... to move up over the year."
TRICKY TRADE-OFFS
The potential economic impact of tariffs presents substantial challenges for the U.S. central bank's rate-setting Federal Open Market Committee.
With monetary policy charged with keeping inflation low and the job market strong, policymakers may face difficult trade-offs in which part of the mandate most needs addressing.
Fed Governor Michael Barr, in the text of a speech to the same event in Iceland, concurred with the view that tariffs could push up inflation while depressing the job market.
"The FOMC may be in a difficult position if we were to see both rising inflation and rising unemployment," he said.
Like his colleagues, Barr said "given the economy's strong starting point and the progress we have made in bringing inflation back toward our 2% objective, monetary policy is in a good position to adjust as conditions unfold."
The Fed may be on track to get its first taste of how tariffs are affecting inflation on Tuesday when the U.S. government releases its Consumer Price Index for April.
"Tariffs should start to affect the inflation data in April, with clearer evidence likely in May and June," Bank of America economists said in a research note on Friday.
"We expect tariff-driven inflation to be temporary, but our conviction is low as there are good reasons why it could be more persistent than we expect."
Even as Fed officials have noted a difficult trade-off balancing both sides of their mandates, they've collectively agreed that keeping inflation pressures contained is critical.
Reporting by Michael S. Derby; Editing by Paul Simao
https://www.reuters.com/world/us/fed-of ... 025-05-09/
"Fed officials, citing uncertainty, reiterate patient policy stance"
By Michael S. Derby
May 9, 2025
Summary
* Fed officials point to economic uncertainty, trade policy risks
* US tariffs may boost inflation, complicate Fed policy decisions
* Fed aims to balance inflation control, job market strength
May 9 (Reuters) - The first wave of Federal Reserve officials to weigh in after this week's policy meeting reiterated on Friday that the current economic uncertainty calls for monetary policy patience as Trump administration trade policy boosts risks to the outlook.
When it comes to the current state of Fed policy, "we're in a good place," New York Fed President John Williams said in an interview with Bloomberg Television.
Declining to speculate where monetary policy will go amid the uncertainty, he said, "let's collect more data, information about what's happening with trade policy" and its impact on the economy and then decide what that means for the Fed's next policy steps.
Fed Governor Adriana Kugler, who spoke in a separate Bloomberg Television interview, said the healthy economy "gives us time" to make more progress lowering inflation pressures before needing to consider a next step.
Both Williams and Kugler described the current state of interest rate policy as placing a modest amount of restraint on economic activity.
The U.S. central bank held its benchmark interest rate steady in the 4.25%-4.50% range on Wednesday and flagged the rising economic uncertainty.
Speaking in a press conference after the end of the two-day policy meeting, Fed Chair Jerome Powell said, "despite heightened uncertainty, the economy is still in a solid position," adding "we believe that the current stance of monetary policy leaves us well positioned to respond in a timely way to potential economic developments."
President Donald Trump's trade policy is the key source of uncertainty for the Fed and broader economy.
In a bid to bring back more manufacturing to the U.S., Trump has slammed nations around the world, particularly China, with very high tariffs.
Many economists believe these import taxes will drive up inflation pressures from levels already above the Fed's 2% target.
At the same time, they're likely to depress economic growth and boost unemployment.
But there's little clarity on how this will all play out, with the outlook further complicated by Trump's constant tariff adjustments and assurances that a slew of trade deals are imminent.
Williams, speaking at a conference in Iceland before his television interview on Friday, said "my own view is I expect growth this year to be ... considerably slower than it was last year, inflation to be higher, unemployment ... to move up over the year."
TRICKY TRADE-OFFS
The potential economic impact of tariffs presents substantial challenges for the U.S. central bank's rate-setting Federal Open Market Committee.
With monetary policy charged with keeping inflation low and the job market strong, policymakers may face difficult trade-offs in which part of the mandate most needs addressing.
Fed Governor Michael Barr, in the text of a speech to the same event in Iceland, concurred with the view that tariffs could push up inflation while depressing the job market.
"The FOMC may be in a difficult position if we were to see both rising inflation and rising unemployment," he said.
Like his colleagues, Barr said "given the economy's strong starting point and the progress we have made in bringing inflation back toward our 2% objective, monetary policy is in a good position to adjust as conditions unfold."
The Fed may be on track to get its first taste of how tariffs are affecting inflation on Tuesday when the U.S. government releases its Consumer Price Index for April.
"Tariffs should start to affect the inflation data in April, with clearer evidence likely in May and June," Bank of America economists said in a research note on Friday.
"We expect tariff-driven inflation to be temporary, but our conviction is low as there are good reasons why it could be more persistent than we expect."
Even as Fed officials have noted a difficult trade-off balancing both sides of their mandates, they've collectively agreed that keeping inflation pressures contained is critical.
Reporting by Michael S. Derby; Editing by Paul Simao
https://www.reuters.com/world/us/fed-of ... 025-05-09/
Re: THE FEDERAL RESERVE
REUTERS
"Exclusive: Fed’s Hammack wants clear data before moving on rates, not much data by June"
By Howard Schneider and Ann Saphir
May 9, 2025
Summary
* Hammack makes her first remarks since Fed's rate decision this week
* Not a lot of data to provide clarity by next meeting: Hammack
* Too early to know effects of tariffs, other policies
PALO ALTO, California, May 9 (Reuters) - The Federal Reserve needs more time to see how the economy responds to U.S. President Donald Trump's tariff and other policies before figuring out the right response, Cleveland Federal Reserve President Beth Hammack said on Friday, noting that much of the administration's sweeping agenda remains unclear.
"I stand ready to move whenever we have clear and convincing evidence, but ... given the overall breadth of the policies that have been discussed and put in place, I think there's a real question about what those impacts are going to look like, and so it may take longer," Hammack said.
"There's not a lot of data between now and June," when the Fed next meets to set interest rates, she said in an interview on the sidelines of a monetary policy conference at Stanford University's Hoover Institution in which she elaborated on the Fed's current dilemma.
While the latest data showed the U.S. economy contracted at a 0.3% annualized rate last quarter, for example, most analysts feel that's not a clear signal of the economic direction because of distortions driven by trade policy; to Hammack, the economy has been resilient and the jury is still out on its future course.
"It is all premature to me -- I think everything is very fluid and I think we need to really wait and see how the data play out," she said.
Likewise she and her fellow policymakers have noted the strength of the job market, where the unemployment rate stands at a low 4.2%, but also acknowledge the risks to it as businesses begin thinking about the fallout from new tariff policies.
If the impact of tariffs lifting prices proves to be limited and the economy weakens, "we'd want to really focus on the employment side of our mandate," she said.
The Fed this week left short-term interest rates in the 4.25%-4.5% range, where they have been since December.
While tariffs raise the risk of both higher inflation and higher unemployment, Fed Chair Jerome Powell said, it’s not yet clear by how much, or for how long, or in what order, and with trade negotiations underway and the full scope of levies unknown, it’s too early to know how the Fed should respond.
Contacts in Hammack's district are laying contingency plans to shrink their workforce if demand weakens, she said.
But for now firms are hanging on to their workers after years of finding it hard to hire, she said.
"People don't know which way it will settle out," she said.
On inflation, she said, tariffs could prompt only one-time price increases.
But she said some businesses say they plan to make a series of price adjustments over time as they learn what level of import taxes they face -- a process that could itself last until well into the summer.
The longer the issues play out, Fed officials worry, the more risk there is that inflation becomes persistent.
That would require tighter Fed policy.
"It's important for us to sit back and make sure we're thinking about all of the different policies, because they do work in different directions, right?"
"The spending policies, deregulation, all of these tariffs could have different consequences," she said.
"And so it's important for us to look at it holistically."
Reporting by Ann Saphir; editing by Diane Craft
https://www.reuters.com/business/feds-h ... 025-05-09/
"Exclusive: Fed’s Hammack wants clear data before moving on rates, not much data by June"
By Howard Schneider and Ann Saphir
May 9, 2025
Summary
* Hammack makes her first remarks since Fed's rate decision this week
* Not a lot of data to provide clarity by next meeting: Hammack
* Too early to know effects of tariffs, other policies
PALO ALTO, California, May 9 (Reuters) - The Federal Reserve needs more time to see how the economy responds to U.S. President Donald Trump's tariff and other policies before figuring out the right response, Cleveland Federal Reserve President Beth Hammack said on Friday, noting that much of the administration's sweeping agenda remains unclear.
"I stand ready to move whenever we have clear and convincing evidence, but ... given the overall breadth of the policies that have been discussed and put in place, I think there's a real question about what those impacts are going to look like, and so it may take longer," Hammack said.
"There's not a lot of data between now and June," when the Fed next meets to set interest rates, she said in an interview on the sidelines of a monetary policy conference at Stanford University's Hoover Institution in which she elaborated on the Fed's current dilemma.
While the latest data showed the U.S. economy contracted at a 0.3% annualized rate last quarter, for example, most analysts feel that's not a clear signal of the economic direction because of distortions driven by trade policy; to Hammack, the economy has been resilient and the jury is still out on its future course.
"It is all premature to me -- I think everything is very fluid and I think we need to really wait and see how the data play out," she said.
Likewise she and her fellow policymakers have noted the strength of the job market, where the unemployment rate stands at a low 4.2%, but also acknowledge the risks to it as businesses begin thinking about the fallout from new tariff policies.
If the impact of tariffs lifting prices proves to be limited and the economy weakens, "we'd want to really focus on the employment side of our mandate," she said.
The Fed this week left short-term interest rates in the 4.25%-4.5% range, where they have been since December.
While tariffs raise the risk of both higher inflation and higher unemployment, Fed Chair Jerome Powell said, it’s not yet clear by how much, or for how long, or in what order, and with trade negotiations underway and the full scope of levies unknown, it’s too early to know how the Fed should respond.
Contacts in Hammack's district are laying contingency plans to shrink their workforce if demand weakens, she said.
But for now firms are hanging on to their workers after years of finding it hard to hire, she said.
"People don't know which way it will settle out," she said.
On inflation, she said, tariffs could prompt only one-time price increases.
But she said some businesses say they plan to make a series of price adjustments over time as they learn what level of import taxes they face -- a process that could itself last until well into the summer.
The longer the issues play out, Fed officials worry, the more risk there is that inflation becomes persistent.
That would require tighter Fed policy.
"It's important for us to sit back and make sure we're thinking about all of the different policies, because they do work in different directions, right?"
"The spending policies, deregulation, all of these tariffs could have different consequences," she said.
"And so it's important for us to look at it holistically."
Reporting by Ann Saphir; editing by Diane Craft
https://www.reuters.com/business/feds-h ... 025-05-09/
Re: THE FEDERAL RESERVE
REUTERS
"Ex Fed's Warsh highlights a path to lower rates, takes a fresh dig at the Fed"
By Ann Saphir and Howard Schneider
May 9, 2025
Summary
* Warsh says Fed would sacrifice the labor market to fight inflation
* Warsh is seen as a front-runner to be the next Fed Chair
* Remarks made at Hoover Institution, linked to Bush-Reagan Republicanism
Palo Alto, California May 9 (Reuters) - Kevin Warsh, an apparent frontrunner to be U.S. President Donald Trump's pick to be the next chair of the Federal Reserve, on Friday suggested a possible pathway to the lower policy rates that Trump has repeatedly pressed the current Fed Chair Jerome Powell to deliver, and delivered a fresh dig at the Fed's conduct of monetary policy.
A large and often growing Fed balance sheet can work at cross-purposes with the Fed's main policy lever of setting short-term borrowing rates, Warsh told a monetary policy panel at Stanford University's Hoover Institution, but "if the printing press could be quiet, we could have lower policy rates."
Warsh served as Fed Governor from 2006 until 2011, when he quit because he opposed the Fed's continued balance sheet expansion as central bank overreach that encouraged the expansion of the nation's debt.
The Fed is currently reducing its balance sheet.
On Friday, Warsh offered an added criticism of the Fed, saying there is no "cruel choice" between the Fed's two objectives of stable prices and full employment, a reference to the idea long prevalent among many central bank policymakers that the cost of bringing down inflation is harm to the job market.
"What it means is, we don't have to push the unemployment rate up to get the inflation rate to fall," Warsh said on the sidelines of the conference.
"At the Fed, when they talk about how we get inflation down, what they really mean is, how do we get the unemployment rate up ... we need to throw people out of work to get the inflation rate to come down, which is nonsense."
"But that's embedded in economic thinking, including at the Fed."
The idea that a "cruel choice" is "nonsense" is actually largely consistent with how the Fed has conducted policy over the last several years, as it brought inflation down from 40-year highs without pushing the unemployment rate above the rate that most economists feel is consistent with full employment, opens new tab.
Powell has repeatedly said he does not feel the current labor market is a source of inflation, suggesting that crushing the job market would do little to lower inflation.
Warsh made his remarks at a conference and an institution steeped in Bush-Reagan Republicanism, now out of favor as Trump and his ideas have come to dominate the party.
The conference was convened in part to celebrate John Taylor, a Bush economic adviser and author of one of the most famous monetary policy rules; Condoleezza Rice, Bush's Secretary of State, spoke on Thursday.
Warsh himself was a Bush appointee to the Fed but also has close family ties to Trump through his wife - the daughter of Trump's former donor Ronald Lauder.
He shared the stage on Friday with Fed Governor Christopher Waller, a Trump appointee who has also been mentioned as a possible candidate for Fed chair.
Waller has said he's prepared to lower rates swiftly should tariffs drive a slowdown in the economy and send the unemployment rate upward.
Asked what the Fed should do now, if its inflation and employment mandates come into tension, Warsh demurred.
"Well, that's a longer discussion," he said, heading back into the conference to hear the next speakers.
Reporting by Ann Saphir; Editing by Aurora Ellis
https://www.reuters.com/business/ex-fed ... 025-05-09/
"Ex Fed's Warsh highlights a path to lower rates, takes a fresh dig at the Fed"
By Ann Saphir and Howard Schneider
May 9, 2025
Summary
* Warsh says Fed would sacrifice the labor market to fight inflation
* Warsh is seen as a front-runner to be the next Fed Chair
* Remarks made at Hoover Institution, linked to Bush-Reagan Republicanism
Palo Alto, California May 9 (Reuters) - Kevin Warsh, an apparent frontrunner to be U.S. President Donald Trump's pick to be the next chair of the Federal Reserve, on Friday suggested a possible pathway to the lower policy rates that Trump has repeatedly pressed the current Fed Chair Jerome Powell to deliver, and delivered a fresh dig at the Fed's conduct of monetary policy.
A large and often growing Fed balance sheet can work at cross-purposes with the Fed's main policy lever of setting short-term borrowing rates, Warsh told a monetary policy panel at Stanford University's Hoover Institution, but "if the printing press could be quiet, we could have lower policy rates."
Warsh served as Fed Governor from 2006 until 2011, when he quit because he opposed the Fed's continued balance sheet expansion as central bank overreach that encouraged the expansion of the nation's debt.
The Fed is currently reducing its balance sheet.
On Friday, Warsh offered an added criticism of the Fed, saying there is no "cruel choice" between the Fed's two objectives of stable prices and full employment, a reference to the idea long prevalent among many central bank policymakers that the cost of bringing down inflation is harm to the job market.
"What it means is, we don't have to push the unemployment rate up to get the inflation rate to fall," Warsh said on the sidelines of the conference.
"At the Fed, when they talk about how we get inflation down, what they really mean is, how do we get the unemployment rate up ... we need to throw people out of work to get the inflation rate to come down, which is nonsense."
"But that's embedded in economic thinking, including at the Fed."
The idea that a "cruel choice" is "nonsense" is actually largely consistent with how the Fed has conducted policy over the last several years, as it brought inflation down from 40-year highs without pushing the unemployment rate above the rate that most economists feel is consistent with full employment, opens new tab.
Powell has repeatedly said he does not feel the current labor market is a source of inflation, suggesting that crushing the job market would do little to lower inflation.
Warsh made his remarks at a conference and an institution steeped in Bush-Reagan Republicanism, now out of favor as Trump and his ideas have come to dominate the party.
The conference was convened in part to celebrate John Taylor, a Bush economic adviser and author of one of the most famous monetary policy rules; Condoleezza Rice, Bush's Secretary of State, spoke on Thursday.
Warsh himself was a Bush appointee to the Fed but also has close family ties to Trump through his wife - the daughter of Trump's former donor Ronald Lauder.
He shared the stage on Friday with Fed Governor Christopher Waller, a Trump appointee who has also been mentioned as a possible candidate for Fed chair.
Waller has said he's prepared to lower rates swiftly should tariffs drive a slowdown in the economy and send the unemployment rate upward.
Asked what the Fed should do now, if its inflation and employment mandates come into tension, Warsh demurred.
"Well, that's a longer discussion," he said, heading back into the conference to hear the next speakers.
Reporting by Ann Saphir; Editing by Aurora Ellis
https://www.reuters.com/business/ex-fed ... 025-05-09/
Re: THE FEDERAL RESERVE
REUTERS
"Fed's independent structure has proved its worth, Waller says"
By Howard Schneider
May 9, 2025
PALO ALTO, California, May 9 (Reuters) - The structure of the Federal Reserve's Board of Governors, with members who cannot be fired over policy disputes and serve for periods staggered across presidential terms, has "stood the test of time" and should be preserved, Fed Governor Christopher Waller said on Friday.
Waller, citing earlier research of his own and others, said the U.S. central bank's system provides electoral accountability by letting every U.S. president who serves a four-year term appoint some members of the seven-person Board of Governors, while the lengthy terms of up to 14 years allow objective, non-partisan policymaking.
That setup is more likely to produce better policy outcomes, with lower inflation and less economic volatility.
Economic stability is "enhanced by having a group of individuals set policy who could not be removed from office," said Waller, a former research director at the St. Louis Fed who was appointed as a Fed governor during President Donald Trump's first term in the White House.
"This structure is the one that we have in place today at the Federal Reserve," Waller told a monetary policy conference at Stanford University's Hoover Institution.
"I would argue that it has stood the test of time, and I hope that it continues to be in place for years to come."
His comments follow what seemed to be threats by Trump earlier this year to try to fire Fed Chair Jerome Powell, though the president has since backed down.
The Fed is closely monitoring a case before the U.S. Supreme Court to see if Trump is allowed to fire officials at other independent agencies.
Waller did not comment on monetary policy or the economic outlook in his prepared remarks.
Reporting by Howard Schneider; Editing by Paul Simao
https://www.reuters.com/world/us/feds-i ... 025-05-09/
"Fed's independent structure has proved its worth, Waller says"
By Howard Schneider
May 9, 2025
PALO ALTO, California, May 9 (Reuters) - The structure of the Federal Reserve's Board of Governors, with members who cannot be fired over policy disputes and serve for periods staggered across presidential terms, has "stood the test of time" and should be preserved, Fed Governor Christopher Waller said on Friday.
Waller, citing earlier research of his own and others, said the U.S. central bank's system provides electoral accountability by letting every U.S. president who serves a four-year term appoint some members of the seven-person Board of Governors, while the lengthy terms of up to 14 years allow objective, non-partisan policymaking.
That setup is more likely to produce better policy outcomes, with lower inflation and less economic volatility.
Economic stability is "enhanced by having a group of individuals set policy who could not be removed from office," said Waller, a former research director at the St. Louis Fed who was appointed as a Fed governor during President Donald Trump's first term in the White House.
"This structure is the one that we have in place today at the Federal Reserve," Waller told a monetary policy conference at Stanford University's Hoover Institution.
"I would argue that it has stood the test of time, and I hope that it continues to be in place for years to come."
His comments follow what seemed to be threats by Trump earlier this year to try to fire Fed Chair Jerome Powell, though the president has since backed down.
The Fed is closely monitoring a case before the U.S. Supreme Court to see if Trump is allowed to fire officials at other independent agencies.
Waller did not comment on monetary policy or the economic outlook in his prepared remarks.
Reporting by Howard Schneider; Editing by Paul Simao
https://www.reuters.com/world/us/feds-i ... 025-05-09/
Re: THE FEDERAL RESERVE
REUTERS
Trump calls on Fed to cut rates, saying prices of 'practically everything' are down"
By Reuters
May 13, 2025
May 13 (Reuters) - U.S. President Donald Trump on Tuesday repeated his call for the Federal Reserve to lower interest rates, saying prices for gas, groceries and "practically everything else" are down.
"No Inflation, and Prices of Gasoline, Energy, Groceries, and practically everything else, are DOWN!!!"
"THE FED must lower the RATE, like Europe and China have done," Trump said on Truth Social.
"What is wrong with Too Late Powell?"
"Not fair to America, which is ready to blossom?"
"Just let it all happen, it will be a beautiful thing!," Trump added, repeating criticism of Fed Chairman Jerome Powell.
Reporting by Ismail Shakil in Ottawa; editing by Rami Ayyub
https://www.reuters.com/world/us/trump- ... 025-05-13/
Trump calls on Fed to cut rates, saying prices of 'practically everything' are down"
By Reuters
May 13, 2025
May 13 (Reuters) - U.S. President Donald Trump on Tuesday repeated his call for the Federal Reserve to lower interest rates, saying prices for gas, groceries and "practically everything else" are down.
"No Inflation, and Prices of Gasoline, Energy, Groceries, and practically everything else, are DOWN!!!"
"THE FED must lower the RATE, like Europe and China have done," Trump said on Truth Social.
"What is wrong with Too Late Powell?"
"Not fair to America, which is ready to blossom?"
"Just let it all happen, it will be a beautiful thing!," Trump added, repeating criticism of Fed Chairman Jerome Powell.
Reporting by Ismail Shakil in Ottawa; editing by Rami Ayyub
https://www.reuters.com/world/us/trump- ... 025-05-13/
Re: THE FEDERAL RESERVE
REUTERS
"Fed's Goolsbee: Data still noisy as Fed waits to understand tariff impacts"
By Reuters
May 14, 2025
WASHINGTON, May 14 (Reuters) - Data showing temperate consumer inflation in April does not necessarily reflect the impact of rising U.S. import tariffs, with the Federal Reserve still needing more data to discern the direction of prices and the economy, Chicago Fed President Austan Goolsbee said on Wednesday.
Consumer prices rose a less-than-expected 2.3% in April, for the smallest annual increase in four years, but the headline number was held down by falling food prices, which can be volatile from month to month.
Excluding food and energy, so-called "core" inflation was 2.8%, the same as in March.
"There are moments of a lot of dust in the air," Goolsbee said on NPR's Morning Edition radio show.
"We've got a bunch of noise ..."
"We're trying to figure out the through line."
The Fed has held interest rates steady since December, and is likely to keep doing so as officials wait to see how the Trump administration's tariff increases and ongoing trade negotiations play out.
"We continue to get these numbers that at least suggest that it's going okay," said Goolsbee, a current voter on the Fed committee that sets interest rates.
"It's just, I think, not realistic to expect businesses or central banks to be jumping to conclusions about long-term things when you've got so much short-term variability."
"That's just a very difficult environment."
Reporting by Howard Schneider; Editing by Alex Richardson and Clarence Fernandez
https://www.reuters.com/world/us/feds-g ... 025-05-14/
"Fed's Goolsbee: Data still noisy as Fed waits to understand tariff impacts"
By Reuters
May 14, 2025
WASHINGTON, May 14 (Reuters) - Data showing temperate consumer inflation in April does not necessarily reflect the impact of rising U.S. import tariffs, with the Federal Reserve still needing more data to discern the direction of prices and the economy, Chicago Fed President Austan Goolsbee said on Wednesday.
Consumer prices rose a less-than-expected 2.3% in April, for the smallest annual increase in four years, but the headline number was held down by falling food prices, which can be volatile from month to month.
Excluding food and energy, so-called "core" inflation was 2.8%, the same as in March.
"There are moments of a lot of dust in the air," Goolsbee said on NPR's Morning Edition radio show.
"We've got a bunch of noise ..."
"We're trying to figure out the through line."
The Fed has held interest rates steady since December, and is likely to keep doing so as officials wait to see how the Trump administration's tariff increases and ongoing trade negotiations play out.
"We continue to get these numbers that at least suggest that it's going okay," said Goolsbee, a current voter on the Fed committee that sets interest rates.
"It's just, I think, not realistic to expect businesses or central banks to be jumping to conclusions about long-term things when you've got so much short-term variability."
"That's just a very difficult environment."
Reporting by Howard Schneider; Editing by Alex Richardson and Clarence Fernandez
https://www.reuters.com/world/us/feds-g ... 025-05-14/
Re: THE FEDERAL RESERVE
REUTERS
"Fed's Jefferson: Expect economy to slow, future inflation uncertain due to tariffs"
By Howard Schneider
May 14, 2025
May 14 (Reuters) - Recent inflation data point to continued progress toward meeting the U.S. Federal Reserve's 2% inflation goal, but the outlook is now uncertain due to the possibility new import taxes will drive prices higher, Fed Vice Chair Philip Jefferson said on Wednesday.
Consumer prices in April rose less than analysts expected, but "there is much uncertainty...around the future path of inflation," Jefferson said in comments prepared for delivery at a New York Fed event.
"If the increases in tariffs announced so far are sustained, they are likely to interrupt progress on disinflation and generate at least a temporary rise in inflation.
"Whether tariffs create persistent upward pressure on inflation will depend on how trade policy is implemented, the pass-through to consumer prices, the reaction of supply chains, and the performance of the economy."
Jefferson said he supported holding the policy rate of interest steady at the last Fed meeting, and felt the current "moderately restrictive" level, in a range of 4.25% to 4.5%, was "well positioned to respond to developments that may arise."
Jefferson said he regarded the labor market as still "solid," and felt that the slight contraction in U.S. economic output over the first three months of the year was distorted by import data that overstated the degree to which the economy was slowing.
Still, Jefferson said, sentiment among businesses and households has declined, and he was "watching very carefully for signs of weakening economic activity in hard data."
He does expect economic growth to slow over the year, but to remain positive.
The steady flow of tariff announcements from the Trump administration, driving import levies to record heights only to see the most aggressive actions postponed, has left the Fed struggling to determine the ultimate impact on prices, growth and employment.
For now policymakers say they are on standby as trade and other policy changes are finalized and their effect on the economy can be studied.
Reporting by Howard Schneider; Editing by Andrea Ricci
https://www.reuters.com/world/us/feds-j ... 025-05-14/
"Fed's Jefferson: Expect economy to slow, future inflation uncertain due to tariffs"
By Howard Schneider
May 14, 2025
May 14 (Reuters) - Recent inflation data point to continued progress toward meeting the U.S. Federal Reserve's 2% inflation goal, but the outlook is now uncertain due to the possibility new import taxes will drive prices higher, Fed Vice Chair Philip Jefferson said on Wednesday.
Consumer prices in April rose less than analysts expected, but "there is much uncertainty...around the future path of inflation," Jefferson said in comments prepared for delivery at a New York Fed event.
"If the increases in tariffs announced so far are sustained, they are likely to interrupt progress on disinflation and generate at least a temporary rise in inflation.
"Whether tariffs create persistent upward pressure on inflation will depend on how trade policy is implemented, the pass-through to consumer prices, the reaction of supply chains, and the performance of the economy."
Jefferson said he supported holding the policy rate of interest steady at the last Fed meeting, and felt the current "moderately restrictive" level, in a range of 4.25% to 4.5%, was "well positioned to respond to developments that may arise."
Jefferson said he regarded the labor market as still "solid," and felt that the slight contraction in U.S. economic output over the first three months of the year was distorted by import data that overstated the degree to which the economy was slowing.
Still, Jefferson said, sentiment among businesses and households has declined, and he was "watching very carefully for signs of weakening economic activity in hard data."
He does expect economic growth to slow over the year, but to remain positive.
The steady flow of tariff announcements from the Trump administration, driving import levies to record heights only to see the most aggressive actions postponed, has left the Fed struggling to determine the ultimate impact on prices, growth and employment.
For now policymakers say they are on standby as trade and other policy changes are finalized and their effect on the economy can be studied.
Reporting by Howard Schneider; Editing by Andrea Ricci
https://www.reuters.com/world/us/feds-j ... 025-05-14/