Fed's Clarida on CNBC:
- We are currently satisfied with our framework and there is a high hurdle for change
- Tariffs have had a small impact, if at all
- More tariffs would have to be taken into account
- If we get the sense that underlying inflation is lower than expected, we're going to put in appropriate policy
- Our goal is to put in place policies that achieve and maintain our mandate
- I don't want to get into what markets are pricing. We can't be handcuffed to fluctuations in markets
- We will have a meeting in June, we will discuss what we have learned since last meeting
- Our reaction function is very clear
- Tariffs boost prices, that's usually not inflationary
- We're at the lower end of the range I would consider consistent with 2% inflation
- There is some evidence of a loss of momentum in the global economy
- Muted inflation is a risk
- You have to look at the yield curve. If the inversion persists for some time that's something I would have to take seriously. So far I wouldn't see it as a strong signal of concern.
This isn't as dovish as I would have expected. I think the like that "more tariffs have to be taken into account" is important and says the Fed will be much more willing to cut if tariffs on Mexico and China ramp up.
Markets haven't been flustered at all by his comments. The S&P 500 just hit a session high of 2794, up 50 points on the day.