On January 13, former Federal Reserve Vice Chairman Randal Quarles emphasized that the Federal Reserve's independence, inflation, and labor market would remain stable, even with the upcoming inauguration of President-elect Trump. During a recent forum, Quarles addressed prevalent misconceptions regarding the Fed's independence, explaining that it does not imply that the President is precluded from voicing opinions about the Fed's policies.
Quarles, who was appointed by Trump and served as the Vice Chairman for Supervision until 2021, highlighted that tariffs on their own should not solely trigger inflation; however, they might have a marginal influence that could lead the Fed to consider lowering interest rates. Furthermore, Quarles projected a substantial deportation of illegal immigrants after Trump's inauguration, asserting that such actions are not expected to have a significant effect on the labor market.
These insights were shared in anticipation of the crucial Consumer Price Index (CPI) report, which is expected to suggest that the U.S. inflation rate may cool only slightly by the end of 2024. This would occur in conjunction with a strong labor market and a robust economy. This context could lend support to the Fed's cautious strategy regarding potential future interest rate cuts, providing a balanced view amidst economic fluctuations..