Federal Reserve's Mester: Economic Growth to Be Below Trend, Inflation Risks to Rise

BlockBeats News, April 9th, Federal Reserve's Mester stated that U.S. economic growth could decline "substantially" below trend level, and the unemployment rate will rise within the year as businesses and households adjust to higher prices due to new import tariffs.

Mester said: "I don't have a recession baseline, but I think economic growth could be significantly below trend," estimating a growth rate around 2%. He stated, "Two-way risks will both become a reality," as higher-than-expected tariffs put pressure on prices, declining confidence and recent sharp stock market declines may dampen spending, hitting household wealth, and rising prices will have an impact, all of which together will lead to slowed economic growth. Mester, who has a vote on interest rate policy this year, said that the monetary policy response will depend on how inflation and unemployment evolve in the coming months, whether price shocks are sustained, and whether inflation expectations remain consistent with the Fed's 2% inflation target. (FXStreet)