Fed should be cautious about adjusting policy, says Michael Barr

Fed Policy & Inflation - Fed governor Michael Bar suggests caution regarding policy adjustments, a sentiment echoed in recent Fed minutes [1] - Bar expresses skepticism about overlooking higher inflation resulting from tariffs, emphasizing the significant risk to the Fed's price stability goal [1] - The Fed is projected to miss the 2% inflation target for 6 and a half years, potentially until 2027, marking the longest period since 1993 [2] - The Fed acknowledges the possibility of a softening labor market and is prepared for potential deterioration [2] Labor Market & Economic Impact - The labor market is considered more vulnerable to shocks [3] - A Dallas Fed paper indicates a new break-even rate of 30,000 for payroll numbers to maintain a stable unemployment rate [4] - The government shutdown is expected to negatively impact GDP in the short term, with a subsequent rebound [3][4]