Despite recent discussions between the US and China regarding tariffs, top Federal Reserve officials, including Governor Kugler, continue to brace for significant economic challenges. They warn that ongoing tariffs will likely lead to increased prices and reduced incomes for Americans, even suggesting a potential stagflationary environment. While the labor market remains stable and is closing in on maximum employment, the uncertainties surrounding trade policy shifts complicate the economic outlook. The Fed emphasizes a moderately restrictive policy stance, acknowledging that it has become increasingly difficult to assess the underlying strength of US economic growth.