MNI BRIEF: Fed's Kugler Says US-China Pause Shifts Her Outlook

Federal Reserve Governor Adriana Kugler said Monday the 90-day rollback of sky-high tariffs on goods flowing between the U.S. and China will mean a reduction in the impact on the U.S. economy.  

"Under various scenarios of how things pass through, my basic outlook in some sense may have changed in terms of the extent to which we need to use our tools, but not directionally," she said at a Bank of Ireland conference in Dublin, Ireland. 

The rate of the tariffs has "gone down tremendously" but is still "pretty high," because China is still a main trading partner, Kugler said. "I still expect increasing prices and a slowdown in the economy, but not to the same extent as before."

Paralyzing uncertainty among businesses and consumers may be in for some reprieve as well, with firms more likely to invest and hire because the deal signals a willingness by both countries to negotiate, Kugler said. (See: MNI INTERVIEW: Tariffs' Inflationary Impact Will Last - Koenig)