- When you have a lot of uncertainty you have to wait for things to clear up
- There has been a decided turn towards anxiety and waiting on capital spending among business contacts
- Fed needs to be a steady hand and take the long view on the economy
- Still a lot of strength in the economy right now
- Imports are only 11% of GDP, so one time tariffs that are not followed by retaliation are more likely to be transitory
- Before judging how monetary policy reacts to tariffs, Fed needs to know how long the tariffs last, possible retaliation, pass through to consumers
- The bigger the tariff supply shock is, the harder it will be for the Fed to look through them
- I’m not a hawk or a dove, I’m a data dog
- I still believe the economy is resilient and if there is progress on inflation rates will be lower in 12-18 months
- When there is uncertainty, you need to wait for the dust to clear
He’s framing tariffs and offering a sense of how the Fed is looking at them.
This article was written by Adam Button at www.forexlive.com.