Warning from the Federal Reserve

Dallas Federal Reserve President Lorie Logan delivered a cautionary message during her presentation at the Peterson Institute for International Economics this Thursday. She highlighted the potential dangers of increasing tariff levels, which could lead to higher unemployment and inflation.

Monetary Policy Stance

"To sustainably achieve both of our dual-mandate goals, it's crucial to prevent tariff-related price hikes from fueling persistent inflation. Currently, I believe our monetary policy is well positioned," Logan remarked.

Inflation Expectations

She further elaborated, "The impact on inflation's persistence hinges on how swiftly businesses transfer cost increases to consumers and whether long-term inflation expectations remain stable." Logan stressed that once high inflation expectations become "entrenched," reversing them becomes more difficult, leading to worsened employment conditions and heightened economic damage.