St. Louis Federal Reserve President Alberto Musalem said on Friday that he expects the economic growth this year to be lower than the trend, per Reuters.
Key takeaways
“Tariffs if implemented poses upside risks to inflation, don’t know if that’s months, quarters or years.”
“On balance, financial conditions have tightened.”
“If tighter financial conditions sustain for a few months that would affect economic activity.”
“Higher inflation and softer labor market closer to baseline scenario now.”
“If inflation expectations become unanchored, have to prioritize fighting inflation.”
“Tariffs will dampen activity as companies rethink supply chains, consumers face higher prices.”
“Uncertainty on tariff announcements also a headwind.”
“Could take quarters, years for tariff effects to make their way through economy.”
“Effect of tariffs on prices could also have an effect on wages.
Market reaction
The US Dollar struggles to find demand following these remarks. At the time of press, the US Dollar Index was down about 1% on the day at 99.92.
