Richmond Fed President Tom Barkin noted that the fast-moving policies of the new administration, particularly around tariffs, have created a “dense fog” of uncertainty. While acknowledging that recent high inflation could amplify the impact of new tariffs, he noted that the ultimate effect remains unknowable given the lack of clarity on final tariff rates and the responses of global actors.

Barkin warned that this heightened uncertainty is already weighing on sentiment. He explained that for consumers and businesses to spend and invest, “they need to have a certain level of confidence”. Without that, demand may quiet, particularly as markets navigate the unknowns tied to policy shifts and geopolitical developments.

“It’s not an everyday ‘forecasting is hard’ type of fog,” he said, but rather one that demands a cautious approach—“a ‘zero visibility, pull over and turn on your hazards’ type of fog.”

In this context, Barkin reiterated that the Fed’s current moderately restrictive stance remains appropriate. “We are waiting for the fog to clear,” he concluded.

Boston Fed President Susan Collins expressed her full support for Fed to keep interest rates unchanged last week, noting that continued economic uncertainty and inflation risks warrant a cautious approach.

Collins said that with upside risks to inflation still present, it would likely be appropriate to maintain current policy settings “for a longer time”. She stressed the importance of “active patience” and flexibility as Fed monitors the evolving economy.

One of the key factors now clouding the outlook is tariffs. Collins acknowledged that new tariffs will almost certainly raise inflation in the near term. However, the longer-term implications depend heavily on how other countries react and whether businesses pass costs onto consumers. These elements could determine whether the inflationary shock is temporary or more persistent.

St. Louis Fed President Alberto Musalem warned that while the initial effects of import tariffs may be short-lived, their broader inflationary impact could linger. He stressed concern that underlying inflation may be influenced more persistently than expected, and if so, Fed might have to consider a tighter policy stance.

Although this isn’t his baseline scenario, Musalem emphasized that the Fed must remain vigilant to second-round effects from tariffs.

He noted that if inflation stays above the 2% target and the economy remains strong, the current “modestly restrictive” monetary stance would need to be maintained longer.

More significantly, “If the labor market remains resilient and the second-round effects from tariffs become evident, or if medium- to longer-term inflation expectations begin to increase actual inflation or its persistence, then modestly restrictive policy will be appropriate for longer or a more restrictive policy may need to be considered,” he said.

Chicago Fed President Austan Goolsbee warned that a shift in market-based long-run inflation expectations toward the elevated levels seen in consumer surveys, such as the University of Michigan’s, would be a “major red flag” demanding immediate Fed attention.

He emphasized that if investor sentiment converges with households’ expectations, now at the highest since 1993, Fed would have little choice but to respond.

Goolsbee noted that Fed has moved into “a different chapter” marked by heightened uncertainty, contrasting with the “golden path” of 2023 and 2024, when inflation eased without damaging growth or jobs.

While he still sees interest rates being “a fair bit lower” in the next 12–18 months, he acknowledged that economic unpredictability, particularly surrounding trade policy, may delay Fed’s next move. His stance: “wait and see is the correct approach,” though not without costs.

In conversations with business leaders, Goolsbee said April 2—the date of expected US tariff announcements—has become a key flashpoint of anxiety. This uncertainty, he said, is fueling a broad hesitancy in investment and hiring decisions across the Fed district.

Fed Governor Adriana Kugler expressed growing concern over the recent behavior of inflation. Speaking today, she highlighted that some inflation subcategories “reaccelerated in recent months.” In particular, goods inflation, which had been negative in 2024 but has recently turned positive.

She warned that this shift is “unhelpful” as goods inflation “has often kept a lid on total inflation and also affects inflation expectations”.

Kugler added that surveys are now pointing to rising inflation expectations among consumers too, with much of the uncertainty tied to ongoing trade policy developments.

Despite these concerns, Kugler reaffirmed confidence in the current policy stance, describing it as restrictive while Fed is “well positioned.

Full speech of Fed’s Kugler here.

Atlanta Fed President Raphael Bostic said in a Bloomberg interview that he’s now projecting just one cut by year-end, down from his earlier expectation of two.

Bostic explained the shift was due to his view that inflation will be “very bumpy and not move dramatically and in a clear way to the 2% target”. With inflation unlikely to return to target until 2027, he believes the path to neutral must also be delayed.

Bostic also expressed concern about the inflationary impact of rising tariffs. While such measures are often assumed to cause a one-off increase in prices, Bostic suggested the current environment could be different.

In his view, businesses and consumers may have grown more tolerant of elevated inflation following the pandemic, making price hikes more likely to stick. He noted that many business leaders now feel confident about “a complete pass-through” of higher costs on to customers without fear of losing market share.