Fed’s Waller on Labor Market, Rate Cuts, Inflation, Fed Chair

Labor Market Analysis - The private sector's employment growth is weaker than perceived, with a significant portion of recent job growth occurring in the public sector [1] - Underlying private sector data indicates a stagnant labor market, making it susceptible to economic shifts [4] - Firms are hesitant to hire, even with strong earnings, impacting the labor market [11] - Immigration is not identified as a primary cause of labor market issues, as unemployment rates for new college graduates remain high [11] Monetary Policy and Interest Rates - A potential July rate cut is under consideration, with the understanding that delaying until September may not be significantly different [13][22] - Dissent within the FOMC is viewed as healthy for policy debate and decision-making [16][17] - The Federal Reserve aims to act proactively, considering long and variable lags in monetary policy [24] Tariffs and Inflation - Economic theory suggests that one-time tariffs result in a one-time price effect, not persistent inflation, unless amplified by other mechanisms [26] - A rule of thumb suggests that a 10% tariff is typically absorbed in thirds by suppliers, firms, and consumers, resulting in a 0.3% impact on the inflation rate for a few months [29] - Continuous waves of increasing tariffs pose a greater risk to inflation than a single, uniform tariff [35] - Market-based inflation expectations are closely monitored, with less emphasis on consumer surveys, to gauge the impact of tariffs and other factors [43]