Impact of US Trade Policy Changes

Federal Reserve Governor Adriana Kugler highlighted the potential economic repercussions of recent US trade policy shifts under President Donald Trump's administration. Speaking at the International Economic Symposium in Ireland, Kugler outlined how these changes could lead to increased prices and a slowdown in economic activity.

Real Incomes and Operating Costs to Feel the Pinch

Kugler explained, "With the anticipated rise in prices, real incomes are expected to decline, and operating costs for businesses are likely to increase. This dual pressure will reduce consumer demand for goods and services and decrease firms' demand for inputs." She further predicted that the US might face lower growth rates alongside higher inflation as a result.

Monetary Policy Preparedness

On the topic of monetary policy, Kugler reassured that the Federal Reserve is "well positioned for any changes in the macroeconomic environment," indicating a readiness to adapt to evolving economic conditions.