Inflation

Federal Reserve Vice Chair Philip Jefferson said Friday that the economic outlook is uncertain and that he was adopting a cautious approach to gauging whether slowing growth and a softening labor market outweigh inflation pressures from tariffs.

Personal income, which rose $95.7B in August, was overtaken by consumer spending, which jumped $129.2B, pushing the saving rate to 4.6% amid steady inflation and higher wages.

The American Bankers Association's Economic Advisory Committee expects the economy to grow, albeit at a slower pace than it previously anticipated. The group pointed to stubbornly high inflation and a weakening job market.

Federal Reserve Governor Stephan Miran floated the idea of conducting monetary policy with an eye toward the neutral rate and suggested that the president's immigration and fiscal policies will exert downward pressure on inflation.

Federal Reserve Board member Lisa Cook said artificial intelligence will be transformative, but cautioned government officials not to assume that gain in AI technology will offset inflationary pressure elsewhere arising in the economy.

The Bureau of Labor Statistics said the consumer price index rose to 0.3% in June to an annualized rate of 2.7%, making the case to cut interest rates more difficult for the Federal Reserve to justify at its next meeting later this month.

In a joint letter signed by over 50 bank trade groups, leaders in the banking industry urged regulators to revise bank regulatory thresholds upward to keep up with inflation.

The Federal Reserve's preferred measure of inflation moved further from its 2% target, underscoring the central bank's reluctance to cut rates.

"I worry a lot about the inflation side, and mainly because we're seeing expectations move in a troublesome way," Federal Reserve Bank of Atlanta President Raphael Bostic said.

Federal Reserve Vice Chair Philip Jefferson said in a speech Wednesday that elevated tariffs will likely lead to inflation, but time will tell how impactful that spike in prices might be.