Fed Governor Adriana Kugler said in a speech that she supports holding interest rates steady as long as upside inflation risks persist, provided that economic activity and employment remain stable.

Kugler noted that the current policy stance is “well positioned” to adapt to evolving macroeconomic conditions, but emphasized the need for caution given the increasing complexity of the outlook.

She highlighted a significant rise in uncertainty, pointing to a dual threat: upward pressure on inflation and downside risks to employment.

The recent escalation in tariffs, described as “significantly larger” than previously expected, has heightened concerns about both growth and price stability.

Kugler warned that “the economic effects of tariffs and the associated uncertainty are also likely to be larger than anticipated.”

Full speech of Fed’s Kugler here.

Minneapolis Fed President Neel Kashkari said overnight that it’s “too soon” to determine the future path of US interest rates. While he acknowledged that tariffs alone may not necessarily reignite persistent inflation, he emphasized that Fed cannot dismiss the risk, especially given the still-elevated price levels in recent months.

At the same time, Kashkari noted that tariffs are likely to weigh on growth, creating a policy dilemma: Fed cannot simultaneously counter rising inflation and rising unemployment without making difficult trade-offs.

Kashkari highlighted that the growing uncertainty surrounding US trade policy is compounding the challenge. While resolution could come quickly if negotiations succeed, the current lack of clarity is already deterring both consumer and business activity.

Adding to the complexity, Kashkari pointed to additional pressure from a weakening dollar and rising Treasury yields, as global investors begin to question the attractiveness of US assets.

“If we’re no longer the economy that investors around the world say, hey, this is the preeminent competitive economy,” he cautioned, “then we probably have less runway.”

Chicago Fed President Austan Goolsbee strongly defended the central bank’s independence in remarks to CNBC, warning that undermining the Fed’s autonomy could have serious long-term economic consequences.

He emphasized that maintaining credibility around the Fed’s 2% inflation target depends on its ability to act free from political pressure.

“When there is interference over the long run,” Goolsbee said, “it’s going to mean higher inflation, worse growth, and higher unemployment, because there’s just going to be “a little less willingness to step up and do the hard things when the moment is tough”.

Goolsbee, who joined the Fed over two years ago, stressed that the economic consensus is overwhelmingly in favor of central bank independence. He pointed to global examples where the lack of such independence has led to significantly worse outcomes—higher inflation, weaker growth, and elevated unemployment.

His remarks come amid heightened concerns over potential political pressure from the White House, as reports circulate about President Trump exploring legal avenues to remove Fed Chair Jerome Powell.

In an interview with Fox Business New York Fed President John Williams said monetary policy is “well positioned”. “I don’t see any need to change the setting of the fed funds rate anytime soon,” he added.

He expected US growth to dip below 1% this year, accompanied by a rise in the unemployment rate to between 4.5% and 5%, as the impact of President Trump’s import tax hikes filters through the economy.

Williams emphasized that this slower pace of expansion should not be mistaken for a recession. “That’s just a slower outlook, slower growth than you’ve seen in the past couple years,” he noted.

He stressed the importance of ensuring that these one-off cost increases from tariffs do not become embedded in broader inflation trends.