The U.S. economy is robust enough to mitigate tariff impacts, and Federal Reserve officials continue to signal patience

On Tuesday, two presidents of the Federal Reserve Banks in the United States delivered speeches regarding the current monetary policy stance, inflation pressures, and the impact of tariffs.

According to the Zhitong Finance APP, Boston Fed President Collins stated at a National Association for Business Economics event in Washington on Tuesday that the overall economic conditions in the U.S. remain robust, allowing the Federal Reserve to "remain patient" in considering whether to cut interest rates.

"The current overall economy is still solid, giving the Fed time to carefully assess various economic data," Collins pointed out in her prepared remarks. "Therefore, in my view, the current 'active patience' monetary policy stance remains appropriate."

Despite the Trump administration's recent push for several aggressive trade policies, particularly high tariff measures, Collins noted that the health of corporate and household balance sheets may mitigate the economic shocks brought about by these policies. "Financial data shows that companies are compressing profit margins, and consumers continue to maintain spending capacity, which may somewhat buffer the impact of tariffs. Therefore, the negative effects on the labor market and economic growth may be relatively limited."

She also revealed that the Boston Fed has developed a new method to quantify how rising prices of imported goods are transmitted to domestic consumer prices in the U.S. She expects that the Fed's preferred core inflation measure may rise to around 3% this year before gradually declining. As of May, this measure was at 2.7%.

Data released on Tuesday showed that the U.S. core Consumer Price Index (CPI) for June rose below expectations for the fifth consecutive month, although some goods have begun to show price pressures from tariffs. This data further intensified the internal divisions within the Fed regarding the inflation path and policy responses.

Meanwhile, Richmond Fed President Barkin pointed out at an event in Baltimore that he believes the next chair of the Fed will formulate monetary policy based on national interests, but emphasized that the Federal Open Market Committee (FOMC) does not necessarily have to accept the chair's policy guidance. "I hope and believe that person will be committed to making the most appropriate decisions for the country."

Current Fed Chair Powell's term will expire in May 2025, at which point President Trump will have the authority to nominate a new chair. Trump has previously called for the Fed to cut interest rates, raising concerns about the central bank's independence. It is widely expected that Trump will nominate a candidate "willing to cut rates."

Potential candidates include former Fed Governor Kevin Warsh, Treasury Secretary Steven Mnuchin, National Economic Council Director Kevin Hassett, and current Fed Governor Christopher Waller, all of whom have expressed support for rate cuts.

Barkin also noted in an interview that while some companies are trying to pass rising costs onto consumers, there are signs of "fatigue" among consumers, with more people choosing to "downgrade their consumption."

"You will see that suppliers are encouraged by the current inflation experience, realizing they are under cost pressure, and thus feel more confident to raise prices," Barkin said. "But on the other hand, consumers are exhausted by inflation and are trying to control their spending." He described this tug-of-war between supply and demand as "still playing out." Currently, there are differing views within the Federal Reserve on how tariffs are transmitted to end consumer prices, which has led to varying judgments on the interest rate outlook. Although some officials remain concerned about the potential risk of inflation resurgence, several members, including Collins and Barkin, seem to advocate for maintaining the current interest rates unchanged to await clearer economic signals