Fed's Collins: Key to understand how uncertainty impacts economy

Fed's Collins is speaking and is not diving deep into the economy or Fed policy:

• Key to understand how uncertainty impacts economy.
• Uncertainty notable in areas where long-term investment is happening.
• Policymakers must understand uncertainty as financial stability component.
• Must look at data holistically to measure uncertainty levels.
• Uncertainty can even speed up some types of economic activity.

Now starting to focus more specifically on the economy/data:

• Must be cautious and humble when looking at data.
• July jobs data was concerning.
• Big revisions can happen at economic turning points.
• Uncertainty leading to wait-and-see approach to price setting

Fed's Collins is a voting member on the 2025 Fed Board..

Fed's Cook is now speaking and says

• AI technology could affect both job inflation sides of Fed mandate.
• AI could bring gains to price stability.
• Broader uncertainty not delaying AI investments and deployment

The “uncertainty” that both Collins and Cook referenced can be likened to a witch’s cauldron—one filled with countless ingredients that make up the brew known as monetary policy. That brew could result in a rate cut, a hike, or no change at all.

Right now, Fed Chair Powell, along with Collins and Cook, are stirring the pot, analyzing each ingredient—the economic data—while the outcome of the mixture remains uncertain.