Fed's Moussallem: US fiscal deficit could become a financial stability issue

Odaily News Fed's Musallem said that the US fiscal deficit is on an unsustainable path. It may become a financial stability issue in the future. The current economic situation is good, and the labor market is at or close to full employment. There are still some upside risks to inflation, but monetary policy is currently moderately restrictive and the financial environment is more conducive to economic growth. Some positive trends in inflation have been observed recently, but due to the impact of tariffs, the inflation outlook is expected to rise in the future. But it is not yet certain whether tariffs will have a more lasting impact. High profit margins provide companies with room to absorb some of the impact of tariffs, and the depreciation of the US dollar may further drive inflation. Musallem pointed out that the specific impact of tariffs may not be fully apparent until later this year or early next year. (Jinshi)