Important statements regarding interest came from Senior FED Official Barkin during the critical FED week!

Richmond FED President Thomas Barkin, one of the FED officials, stated in a statement today that the risk of new tariffs pushing inflation up still remains uncertain, adding that there is no need for any haste towards interest rate cuts. In an interview with Reuters, Barkin said, "These data do not force us into interest rate cuts... I am very clear that we have not reached our inflation target for four years."

Businesses in the Barkin area are expecting price increases due to new customs duties that will come into effect later in the year. Moreover, the possibility that customs duties may rise further in the coming months is also noteworthy. Barkin also stated that the unemployment rate remains low, hovering around 4.2%, and that companies are not showing a trend towards mass layoffs. This indicates that the FED's goal of "maintaining maximum employment" is still valid.

Barkin, stating that the final impact of customs duties has not yet become clear, noted that the current "wait-and-see" policy is being maintained, saying, "It's not about hitting the brakes, but we also shouldn't step on the gas."

According to the new economic forecasts released by the FED on the same day, it is anticipated that economic growth will slow down and inflation will rise in the upcoming period. However, policymakers expect interest rate rebates to occur within 2025. This indicates a belief that, even though customs duties are accepted to raise prices, this effect will not be permanent.

However, there are noticeable disagreements among the 19 FED officials. Seven officials believe that there should be no interest rate cuts this year, while eight officials anticipate two interest rate cuts. This view coincides with the market's expectations of two cuts of 25 basis points each in September and December. Of the remaining four officials, two expect one cut, while the other two expect three cuts.

Federal Reserve Board members Christopher Waller and Thomas Barkin are on different ends regarding interest rate cuts. While Waller suggests that rate cuts could begin in July, Barkin argues that it is too early for that. Although both individuals do not specify a clear rate, they hold completely opposing views on the impact of the Trump administration's tariffs on prices, employment, and economic growth in the coming months.

*This is not investment advice.

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