Governor Kugler delivered a speech focusing on the current U.S. economic outlook and the implications of evolving trade policies. While recent data indicate a resilient economy, growth is expected to slow this year compared to the previous one. Labor market conditions remain stable, but inflation persists above the Federal Open Market Committee’s (FOMC) 2% target, with disinflation progress being sluggish. Kugler emphasized monitoring the effects of changing trade policies, which could significantly impact the U.S. and global economies. Tariff uncertainties have already influenced economic behavior through front-loading, sentiment shifts, and altered expectations. Economic activity assessments reveal challenges in accurately gauging underlying growth due to tariff-induced import surges. Labor markets show signs of easing, with job openings declining and vacancy rates reaching six-month lows. Inflation remains above the FOMC’s goal, with core goods and nonhousing market services inflation warranting close attention. Kugler highlighted that higher tariffs act as a negative supply shock, potentially raising prices and reducing economic activity. Increased uncertainty surrounding global policy changes affects consumer and business behavior, possibly leading to delayed investments and precautionary savings. Despite these challenges, Kugler remains committed to achieving the dual mandate of maximum employment and price stability.
— new from Federal Reserve Board (.gov)
