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- Inflation is running about 3% above the 2% target
- tariffs are impacting, but expect those pressures to fade after 6 to 9 months. But it could be more persistent.
- The Fed has a dual mandate.
- I am going both things that inflation is 1% above target, and that the risks to the employment are to the downside.
- I see the labor market stable around full employment.
- There are some signs of weakening. Payroll growth was low with very large revisions.
- The demand for labor has declined but so has the supply.
- With lower immigration flows, it’s reasonable to expect that the nonfarm payroll could be sub 50 K
- Despite the slower job growth, the unemployment rate remained steady at 4.2%.
- I take a meeting by meeting approach.
- I tried to be as forward-looking as possible.
- The last two months I have been revising my reassessment of the labor weakness higher.
- I have adjusted my reassessment of inflation as a result of the tariffs to the downside.
- For me it is too early for me to say exactly what policy I will support.
- I see risks that inflation be more persistent but it’s not my basecase.
- Slower growth and potential margin pressure could lead to lower employment
- Having said that, the companies that I am in touch with are not speaking toward layoffs
- My job is to listen to Main Street and the people I represent in my district.
This article was written by Greg Michalowski at investinglive.com.
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