Fed's Kugler: Still expect increase in prices and slowdown in the economy

Federal Reserve Governor Adriana Kugler said that if tariffs prove to be long-lasting, she would focus on how global supply chains are rearranged in response, while she acknowledged that the recent reduction in US-China tariffs was clearly an improvement in bilateral trade relations, though tariff levels remained relatively high.

Key Quotes

• If tariffs long lasting, the one issue I would be looking to is how supply chains get rearranged in the rest of the world.
• US/China tariff reduction obviously an improvement as far as trade between countries go, still pretty high.
• Still expect increase in prices and slowdown in economy though not to same rate as before.
• My basic outlook may have changed in terms of extent to which we need to use our tools, but not direction.
• Extent of uncertainty may have gone down a bit, extent of supply shock.
• I am one of those who believes there could be some permanency from price increases related to tariffs.
• Given really tight labour market post-pandemic, many businesses reluctant to let people go.