Federal Reserve Bank of Chicago President Austan Goolsbee said on Thursday (29) that they could return to a situation where interest rates could fall if tariffs are avoided through a deal or otherwise, according to Reuters.
"If politics drives interest rates, inflation will come back," Goolsbee added, further noting that sometimes central banks have to do what the political apparatus doesn't like.
"Stagflation is the worst case scenario for central banks; that's not what we're facing now."
"This is the direction of stagflation, but it's not stagflation."
Market reaction
The US Dollar Index remained under bearish pressure after these comments and was last seen down 0.45% on the day at 99.45.
The FXStreet Speech Tracker gave these comments a score of 5.4, indicating that they were relatively neutral. Meanwhile, the FXStreet Fed Sentiment Index remained in hawkish territory above 110.00.(alg)
Source: FXstreet
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