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Former Federal Reserve Vice Chairman Quarles believes that even if Trump is re-elected, it will not affect the independence of the Federal Reserve and economic stability. He pointed out that there is a misunderstanding about the independence of the Federal Reserve, emphasizing that the president can express opinions on policies, but that does not mean the Federal Reserve will lose its independence. Quarles predicts that if Trump is elected, it may lead to a large number of illegal immigrants being deported, but this will not have a significant impact on the labor market. He also mentioned that tariffs themselves do not directly lead to inflation, but may instead prompt the Federal Reserve to lower interest rates.
These remarks come just as the consumer price index report is about to be released. The report may show that, amid a strong labor market and a robust economy, potential inflation in the U.S. at the end of 2024 is only slightly cooling, which may support the Federal Reserve in adopting a cautious stance in future interest rate cut decisions.
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