Fed’s policy stance is well positioned

During her Thursday remarks, Dallas Federal Reserve (Fed) President Lorie Logan warned that tariffs exceeding expectations would almost certainly spark a surge in both unemployment and inflation.

Key Quotes

• Important to keep any tariff-related price increases from fostering more persistent inflation.
• If higher inflation expectations get entrenched, the road to price stability is longer, and economic scars are deeper.
• For now, the stance of Fed policy is well positioned.
• Financial markets have been volatile.
• Higher-than-expected tariffs would very likely raise both unemployment and inflation.
• A sustained burst of inflation could lead to a rise in inflation expectations.
• Inflation persistence will depend on how quickly companies pass through cost increases, and if long-term inflation expectations remain well anchored.