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Fed’s Hammack Urges Patience
Finance Megaphone
May 09, 2025
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Fed Stays Cautious as Trade Tensions Cloud U.S. Economic Outlook
American Workers Lose Confidence in Job Market Amid Economic Uncertainty and Tariff Tensions
Fed’s Hammack Urges Patience on Interest Rates Amid Uncertainty from Trump’s Tariff Policies
Fed Stays Cautious as Trade Tensions Cloud U.S. Economic Outlook
Federal Reserve officials are urging patience in setting interest rates amid growing economic uncertainty fueled by President Trump's aggressive trade policies, particularly with China. Following their recent meeting, the Fed held rates steady at 4.25%-4.50%, with leaders like New York Fed President John Williams and Governor Adriana Kugler emphasizing the need to gather more data before making any moves. They noted that while the U.S. economy remains strong, Trump's shifting tariffs could raise inflation and slow growth, making it harder for the Fed to balance its dual goals of low inflation and full employment. Fed Chair Jerome Powell echoed this cautious stance, stating that current policy allows flexibility to respond as conditions evolve. As tariff effects begin to show in upcoming inflation data, officials remain concerned that rising prices and job losses could pose conflicting challenges, reinforcing their wait-and-see approach to monetary policy.
American Workers Lose Confidence in Job Market Amid Economic Uncertainty and Tariff Tensions
U.S. workers are increasingly doubtful about their job prospects, with a New York Fed survey showing confidence in finding new employment if laid off has dropped to its lowest level since March 2021, despite steady job growth and low unemployment. Concerns are growing over rising inflation expectations and the long-term impact of President Trump’s tariffs, which continue to unsettle consumers, investors, and the labor market. While April saw 177,000 new jobs added and the jobless rate held at 4.2%, many Americans fear worsening economic conditions—especially younger workers and low-income households. Inflation expectations remain elevated, and Fed Chair Jerome Powell emphasized a cautious, data-driven approach to interest rate changes, citing heightened economic uncertainty. A limited trade deal with the UK offers a glimmer of hope, but the overall outlook remains clouded by unpredictability in trade policy and its potential to disrupt prices and employment.
Fed’s Hammack Urges Patience on Interest Rates Amid Uncertainty from Trump’s Tariff Policies
Cleveland Fed President Beth Hammack stressed the need for clear, convincing economic data before considering changes to interest rates, citing uncertainty from President Trump’s tariffs and broader policy shifts. Speaking at a Stanford conference, Hammack noted limited economic data before the Fed's June meeting and emphasized that the economy, though currently resilient with low unemployment, could shift due to unclear trade impacts. While recent contraction in GDP and inflation risks remain concerns, Hammack said the Fed must take a holistic approach, evaluating how tariffs, deregulation, and spending policies interact. Businesses are preparing for possible slowdowns, but many are holding onto workers amid hiring challenges. Hammack warned that if inflation becomes persistent due to ongoing tariff-driven price adjustments, the Fed may need to tighten policy—but for now, patience and flexibility remain key.
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That’s a wrap for this edition of Finance Megaphone.
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