The minutes of the Federal Reserve's (Fed) discount rate meetings from April 7, 28, and May 8 revealed that policymakers are increasingly uneasy about the coming economic impacts, mostly from U.S. trade policy. While overall economic conditions are stable, tariff uncertainty continues to weigh on business operators, who are preparing contingency plans and slowing their investment and spending rates.

Key highlights

Overall, central bank directors noted considerable uncertainty about the outlook.

While most directors described current economic conditions as generally stable, they also expressed concerns about the potential impact of evolving trade and other policies on economic activity, prices, and employment.

Given the heightened uncertainty, many directors noted that consumers and businesses are becoming more cautious about their spending and future plans.

Several directors commented on expected price pressures related to tariffs, including higher prices for consumers.

Labor market conditions remain healthy, with several directors noting low employee turnover and limited layoffs.

Several directors said businesses in their districts had indicated future staff reductions may be necessary to absorb costs associated with tariffs and reduced government funding in certain sectors. (alg)

Source: FXstreet