Speaking overnight, Chicago Fed President Austan Goolsbee said that nothing is “off the table”, including rate hikes, cuts, or holds. The sheer scale of recent trade developments creates a stagflationary shock, and there is “not a generic playbook” for how a central bank should respond to.

Also, Goolsbee noted a key challenge: the data being released now may not yet fully reflect the evolving reality on the ground. That’s why he believes Fed must closely monitor both hard data and soft indicators, especially as lag effects complicate interpretation.

Despite the tariff-related uncertainty, Goolsbee still sees rates trending lower over the next one to two years. Nevertheless, he stressed that should long-run inflation expectations begin to drift, “any central bank almost has to address that… regardless of what the other conditions are.”

Boston Fed President Susan Collins said in a speech overnight that keep interest rate at current level is “appropriate for the time being” due to the “highly uncertain environment.”

Collins acknowledged that “renewed price pressures” from tariffs could “delay further normalization of policy”.

“Confidence is needed that the tariffs are not destabilizing inflation expectations,” she emphasized.

She added that any “preemptive action” to support growth would require a “compelling” signal that economic activity is deteriorating more than expected.

Although she expects inflation to gradually return to the 2% target, she acknowledged that core inflation may rise “well above” 3% in the near term due to higher import costs. In her view, the Fed must remain vigilant to ensure these pressures do not become entrenched.

Kansas City Fed President Jeff Schmid delivered a hawkish message today, emphasizing that his primary focus remains “squarely” on the inflation outlook.

He flagged a notable increase in upside inflation risks alongside rising downside risks to employment and growth, painting a challenging picture for policymakers.

However, he emphasized, “With renewed price pressures likely, I am not willing to take any chances when it comes to maintaining the Fed’s credibility on inflation.”

Addressing the inflationary impact of tariffs, Schmid acknowledged that while economic theory suggests a one-off price shock rather than sustained inflation, he’s not inclined to rely too heavily on that assumption under current conditions.

“I would be hesitant to take too much solace from theory in this environment,” he noted, referencing recent episodes of persistently high inflation that caught many off guard.

Dallas Fed President Lorie Logan emphasized today that Fed must be vigilant in preventing tariff-related price increases from “fostering more persistent inflation”.

She noted that the inflationary impact of tariffs hinges on two key variables: how rapidly businesses pass higher import costs onto consumers, and whether long-term inflation expectations stay anchored.

“A sustained burst of inflation could lead households and businesses to expect further price increases, especially following the persistently elevated inflation in recent years.” she warned.

The minutes from the FOMC’s March meeting revealed growing concern among policymakers about the economic outlook, particularly amid rising uncertainty. While these discussions occurred before the dramatic escalation of the US tariff war in April, the insights remain valuable.

“Almost all” participants viewed inflation risks as tilted to the “upside”, while “downside” risks to employment and growth were also flagged—setting the stage for a policy dilemma.

Some officials highlighted that the Fed could soon face “difficult tradeoffs,” especially if inflation remains elevated while job and growth prospects deteriorate.

Notably, a few participants also warned that an “abrupt repricing of risk in financial markets” could magnify the impact of any negative economic shocks. Given what has since transpired with global markets in April, these comments seem prescient.

While the minutes may now appear somewhat outdated, they nonetheless provide a crucial baseline for understanding how the Fed might react in an increasingly fragile environment.

Full FOMC minutes here.

Minneapolis Fed President Neel Kashkari warned that the unexpectedly high and broad scope of recently imposed US tariffs has created “larger direct economic effect and larger shock to confidence”.

In a blog post today, he noted that this has increased the “hurdle” for Fed to adjust interest rates in either direction. He emphasized that due to the inflationary pressures tariffs are likely to bring in the “near term”, the bar for cutting rates is also “higher” even in the face of rising unemployment.

Kashkari expressed concern that due to uncertainty of escalating trade tensions and retaliatory measures from other countries, “risk of unanchoring inflation expectations seems to have increased notably”.

At the same time, he acknowledged that the demand for investment capital is likely to decline due to weaker growth prospects, which would naturally lower the neutral interest rate (r*). This dynamic could make current monetary policy stance relatively tighter without any Fed action.

Ultimately, Kashkari struck a cautious but flexible tone, noting that while Fed should be especially wary of cutting rates amid rising inflation risks, it must also remain responsive to rapidly changing conditions.

“No monetary policy response, up or down, should be completely off the table,” he concluded.

Full article of Fed’s Kashkari here.

Chicago Fed President Austan Goolsbee and San Francisco Fed President Mary Daly both sounded cautious overnight amid rising uncertainty from the unfolding global tariff war.

Goolsbee highlighted the unexpected magnitude of the tariff impact, calling them a “way bigger” shock than anticipated. He likened them to a “negative supply shock” and acknowledged that Fed’s appropriate policy response is unclear.

He warned of ripple effects through slower consumer and business activity, especially in a post-pandemic economy still scarred by past inflationary surges.

Meanwhile, Daly struck a more measured tone, noting that while she is “a little concerned” about the inflationary effects of tariffs, she emphasized Fed’s current policy is well-positioned and policymarkers can “just tread slowly and tread carefully.”

“The thing that’s really important is you stay steady in the boat while you think about not what’s happening over the last two days, but the net effect of the slate of changes that any administration wants to take,” she added.