Federal Reserve Governor Kugler spoke earlier on the transmission of monetary policy, Q&A now:
Facing potential shocks now, much related to tariffs and uncertainty
I don't think the public is losing confidence in us
We have a lot of trust from the public; inflation expectations are anchored
Uncommon for bond yields to go up and the dollar to weaken, but don't jump to the conclusion that we are no longer a safe haven
And I would certainly say that does not reflect on the Fed's work
Wages are not putting inflation pressures on the services sector
- So far, not seeing strong pressures in labor market as immigration declines
- Paying close attention to agriculture and construction, where immigrants account for a large portion of workers
- In those sectors wages are still consistent with 2% inflation
- Its not clear if AI will replace workers, likely enhance productivity
- If protect the economy so much that you don't let new businesses come in, that could be a reversal on productivity
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It appears Kugler is not aware of Trump's latest flip flop:
- Trump backing away from tariffs, backing away from firing Powell - will it last?
- Trump says he has no plans to Fire Federal Reserve Chair Powell
- Trump says he is going to be very nice to China, they have to make a deal
If Trump is to be believed, and also if he does not reverse the reversals, the risk has diminished.
