The Federal Reserve warns of tariff risks.

During several public events held this Tuesday (May 21), two Federal Reserve regional bank presidents shared their views on the current economic outlook, particularly highlighting the broad impact that tariff policies might have on the U.S. economy. St. Louis Fed President Austen Goolsbee noted that although China and the U.S. reached a phase one tariff easing agreement this month, trade tensions could still exert significant short-term economic pressure.

Tariffs May Hamper Economy and Employment

In a speech in Minneapolis, Goolsbee stated that tariffs could not only suppress overall economic activity but also exacerbate weaknesses in the labor market. He pointed out: "Even though tensions have eased somewhat after May 12, uncertainty brought by tariffs remains and could significantly impact the short-term outlook."

Currently, the United States and China are attempting to drastically reduce mutual tariffs over the next 90 days while resuming trade talks. However, Goolsbee cautioned that if tariffs persist, their resultant price pressures and reduced investment could burden the economy in the long term.

Maintaining Public Confidence in Anti-Inflation Commitment is Crucial

Amid an unclear inflation path, Goolsbee stressed that the Federal Reserve must remain flexible in adjusting policies while closely monitoring public expectations on future prices. He emphasized that stable inflation expectations are a crucial prerequisite for the Fed to make balanced responses between employment and inflation.

He stated: "Now is the time to maintain public confidence in the Fed’s commitment to fighting inflation." If the inflation rebound is only temporary, policies can be appropriately loosened to support employment, but he also warned that premature easing might underestimate the persistence and risks of inflation.

Bostic: Treasury Market Volatility Increases Policy Uncertainty

Meanwhile, Atlanta Fed President Raphael Bostic noted in another event that recent volatility in the U.S. Treasury market might heighten existing uncertainties. Although he believes the current market operations do not pose a direct risk, the Fed might need to delay the normalization of policy in the context of elevated uncertainty.

"I am satisfied with the current policy stance, but if the situation becomes more complex, we may need more time to restore economic order," Bostic mentioned.

Dual Inflation Scenarios Require Policy Flexibility

Goolsbee further analyzed that there are two possible inflation trends: one where price increases caused by tariffs are temporary, and another where inflationary pressure might be more sustained. He stated that the Fed needs to be prepared for both scenarios. If negotiations go smoothly and tariffs decrease, inflation might continue to ease towards the 2% target; however, if trade tensions escalate, policy must prioritize price stability over reckless easing.

The views of various officials indicate that the Federal Reserve is dealing with multiple variables when formulating policies, including inflation trends, the labor market, trade policies, and financial market instability. The decision-making space will be more reliant on careful assessment and dynamic adjustment based on future data.

The market carries risks, and investment should be cautious. This article does not constitute personal investment advice and has not taken into account individual users' specific investment goals, financial situations, or needs. Users should consider whether any opinions, viewpoints, or conclusions in this article are suitable for their particular circumstances. Investing based on this is at one's own responsibility.