On a big day for commentary from Federal Reserve officials, Fed Governor Michael Barr and New York Fed President and CEO John Williams warn that President Trump's tariffs could lead to higher inflation and unemployment levels.
Yahoo Finance senior Fed reporter Jennifer Schonberger provides coverage of the biggest takeaways from today's Fed commentary.
To watch more expert insights and analysis on the latest market action, check out more Catalysts here.
Chicago Fed president Austin Goolsbee is delivering opening remarks at a Fed event focusing on perspectives from the Midwest. We're following his commentary on a busy day of Fed speak. We've already heard from Fed governors Michael Barr and Adriana Kugler as well as Fed presidents John Williams and Tom Barkin. Joining us now with the highlights, Yahoo Finance Fed correspondent Jennifer Schonberger. Jennifer, what have you heard so far this morning?
Good morning, Maddie. Both Fed governor Michael Barr and New York Fed president John Williams warning that President Trump's tariffs are expected to lead to higher unemployment and higher inflation, as well as slower growth. These comments echoing Fed chair J. Powell's earlier this week as the Central Bank held rates steady. In a speech in Iceland this morning, Barr said the Fed could be in a difficult position if we were to see both rising inflation and rising unemployment, though he noted it's too soon to know how tariffs will impact the economy because we don't know the final rate levels yet on tariffs. Like his peers, he believes interest rates are at a good level right now to pivot as things unfold. Now, Barr sees higher tariffs leading to disrupting global supply chains and creating long-lasting inflation. He anticipates businesses will have to change where they source parts for their products, which will take time for them to revisit and reroute. He warns that big changes in global trade networks could mean the failure of some small businesses, as he says they have less access to credit and do not have multiple sources for supplies. Now, speaking at that same conference in Iceland this morning, Williams said that we are experiencing a great moment of uncertainty and change and that uncertainty is a defining characteristic of the economic landscape for the foreseeable future. He stressed the importance of maintaining inflation expectations amid this uncertainty. Williams says he personally expects considerably slower growth this year, and while the general view is for higher unemployment and higher inflation, the Fed doesn't know the exact mix of that and how that might play out, as well as the time horizon, and thus it makes it difficult for them to set monetary policy preemptively. Later this morning, we will hear from Fed Governor Chris Waller, and this evening from Cleveland Fed president Beth Hammack and St. Louis Fed president Alberto Musalam.
